An Post
Superannuation
Schemes 2014
Annual Report and Financial Statements
Contents
Trustees and Other Information
2
Trustees’ Report
5
Investment Report
11
Actuary’s Statement
20
Statement of Trustees’ Responsibilities
21
Independent Auditor’s Report
22
Statement of Accounting Policies
23
Fund Account
25
Net Assets Statement
26
Notes forming part of the Financial Statements
27
Appendices
Appendix 1
Statement of Investment Policy Principles
38
Appendix 2
Statement of Risks
42
Appendix 3
Internal Disputes Resolution Procedure
43
Appendix 4
Actuarial Funding Certificate
46
Appendix 5
Funding Standard Reserve Certificate
47
An Post Superannuation Schemes 2014
1
Trustees and Other
Information
Trustees
Patrick Gallagher (Chairman)
Anthony Harmon
Patrick Knight
Brian McCormick
Alan McGeehan
Charles O’Neill (retired 25 February 2015)
Niall Phelan (appointed 29 May 2014)
Actuary
Michael Madden F.S.A.I.
Mercer Consulting
Charlemont Street, Dublin 2
Registered Administrator
Pensions Administration, An Post, General Post Office, Dublin 1
Investment Managers
State Street Global Advisors Ireland Limited (SSgA)
PIMCO Europe Ltd
AXA Rosenberg
JP Morgan
Heptagon Capital
IPUT plc
Fidelity International
Irish Forestry Unit Trust (IForUT)
Rockspring Property Investment Managers LLP
Czech Asset Management LLP
Alder Capital Limited
Goldman Sachs Limited
North American Forestry Investment Trust (NAFIT)
Custodian
The Bank of New York Mellon Asset Servicing
BV 160 Queen Victoria Street, London
EC4V 4LA, United Kingdom
Independent Auditor
KPMG Chartered Accountants & Registered Auditor, 1 Harbourmaster Place,
IFSC, Dublin 1
Solicitor
Chief Legal Officer, An Post, General Post Office, Dublin 1
Bankers
Bank of Ireland, 6 Lower O’Connell Street, Dublin 1
Secretary
Paul Dolan, An Post, General Post Office, Dublin 1
Registration Number
PB 43750
2
An Post Superannuation Schemes 2014
Trustees of the An Post
Superannuation Schemes
1.
2.
3.
4.
5.
6.
7.
8.
1.Patrick Gallagher
Chairman
2.Anthony Harmon
Trustee
3.Patrick Knight
Trustee
4.Brian McCormick
Trustee
5.Alan McGeehan
Trustee
6.Charles O’Neill
Trustee (retired
25 February 2015)
7.Niall Phelan
Trustee (appointed
29 May 2014)
8.Paul Dolan
Secretary
An Post Superannuation Schemes 2014
3
The power to appoint and remove all
Trustees is vested in the Company and this
power must be exercised by deed. Three of
the Trustees are selected by An Post and
three of the Trustees are recommended for
appointment by the members.
4
An Post Superannuation Schemes 2014
Trustees’ Report
This Annual Report contains all the details and information required
under the Pensions Acts, 1990 to 2006, the Occupational Pension Schemes
(Disclosure of Information) Regulations, 2006 to 2013 and the Statement
of Recommended Practice ‘Financial Reports of Pension Schemes’ (Revised
May 2007) (the SORP), together with some additional information which
we feel will be of interest to members and other interested parties.
1. Introduction
The An Post Superannuation Schemes (“the Schemes”) are
registered with the Pensions Authority in accordance with
Section 60 of the Pensions Act, 1990 as Public Service Defined
Benefit Occupational Pension Schemes and the appropriate
annual registration fee has been paid.
A summary of the investment strategy and valuation of the
Fund is set out on pages 6 and 7 of the Trustees’ Report under
“Developments during the Year.” A copy of the latest actuarial
valuation is available to members on request from the
Secretary of the An Post Superannuation Schemes, General
Post Office, O’Connell Street, Dublin 1.
2.The Schemes
The Superannuation arrangements effective from 1
January 1984 (Vesting Day) for pensionable staff of An Post
(the principal employer) are set out in an Interim Trust
Deed dated 6 February 1986 and a definitive Trust Deed
dated 12 November 1990. Benefits are provided through
two schemes, An Post Main Superannuation Scheme,
1990 and An Post Spouses’ and Children’s Contributory
Pension Scheme, 1990. These Schemes were approved by
the then Minister for Communications on 11 June, 1990, by
the then Minister for Finance on 25 June 1990 and by the
Revenue Commissioners on 14 February 1991. A booklet
summarising the principal details of the Schemes has
been distributed to all members.
An Post Main Superannuation Scheme, 1990 was amended
by deed dated 28 July 1992 which provided formal schemes
for (a) the purchase of notional service, (b) the granting
of professional notional service and (c) the refund of
marriage gratuities on re‑employment. Ministerial and
Revenue Commissioners’ approval was received for these
amendments. On 10 June 1997, the Trustees adopted the An
Post Superannuation (Amendment) Scheme, 1997 which
formalised the calculation and repayment mechanism in
respect of the amount due from the Minister for Finance.
On 7 December 1999, the Trustees adopted the An Post
Superannuation (Amendment) Scheme, 1999 whereby the
Minister for Finance commuted his liability as calculated
with effect from 30 November 1999 by the payment of
€571 million into the Schemes. Consequently, the Schemes
assumed responsibility for the payment of all pension
entitlements of staff, as calculated at that time, for service
given before and after Vesting Day. The pensionable
entitlement of any member remains unaffected by these
funding arrangements.
An Post Superannuation Schemes 2014
An Post Main Superannuation Scheme, 1990 was amended
by deed dated 1 January 2002 whereby the Trustees agreed
with An Post that all expenses formerly discharged by the
Company under Clause 29(b) of the principal deed would
henceforth be paid by the Trustees.
An Post Main Superannuation Scheme, 1990 was further
amended by deed dated 13 February 2012 which took account
of all legislative amendments to the Pensions Act 1990 not
previously reflected in the Main Scheme and subsequent
changes which occurred as a result of payroll agreements
implemented by An Post. This deed, entitled the An Post
Main Superannuation Scheme (2011), 2012, reflected the
relevant changes advised to members in a letter from the
Trustees dated 11 July 2011. The changes were subsequently
incorporated into the amended An Post Main Superannuation
Scheme 2012 with an effective date of 1 January 2012.
Both amendments were approved by the Minister for
Communications, Energy and Natural Resources and the
Minister for Public Expenditure and Reform on 13 February
2012. There have been no adverse changes to members’
benefits, as a consequence of these amended Schemes.
The An Post Main Superannuation Scheme, 1990 was again
amended by deed on 21 January 2015. The amendments
include the adjustment to the normal retirement age for
certain members and to the definition of pay designated as
pensionable. If members wish to inspect any of the Schemes’
documents or have any queries about the provisions of the
Schemes or the entitlements thereunder, they should contact
the Secretary of the An Post Superannuation Schemes,
General Post Office, O’Connell Street, Dublin 1 (Telephone
01‑7057594).
3.The Trustees
Stewardship of the Schemes’ assets is in the hands of the
Trustees. The current Trustees of the Schemes, at the date of
signing of this report, are as set out on page 2 of this report.
Trustee meetings are held at least quarterly and 12 Trustee
meetings were held during 2014. A minimum of two Trustees
must be present for valid decisions to be taken. Decisions
require the majority support of those Trustees present.
The power to appoint and remove all Trustees is vested in the
Company and this power must be exercised by deed. Three of
the Trustees are selected by An Post and three of the Trustees
are recommended for appointment by the members. The
seventh Trustee, who also holds the position of independent
Chairman, is selected by the Company. Mr Niall Phelan was
appointed as a Trustee on 29 May 2014 and Mr Charles
O’Neill retired as a Trustee on 25 February 2015.
5
Trustees’ Report
Continued
In accordance with the terms of the Occupational Pension
Schemes (Member Participation in the Selection of Persons
for Appointment as Trustees) (No.3) Regulations, 1996 (SI
1996/376), the members have the right to select or approve
the selection of Trustees.
The Pensions Act, 1990 to 2006 outlines the general duties of
Trustees which are:
1. to ensure, in so far as is reasonable, that contributions
payable by the members and the employer are received;
2. to provide for the proper investment of funds;
3. to make arrangements for the payment of benefits;
4. to ensure that proper membership and financial records
are kept.
The Trustees and the administrator have access to
appropriate training on their duties and responsibilities
and, during the year, €1,750 (2013: €3,998) was expensed
in relation to Trustees’ training. The Trustees and the
administrator of the Schemes have access to (i) the Trustee
Handbook produced by The Pensions Authority and (ii) the
Guidance Notes issued by The Pensions Authority from time
to time in accordance with Section 10 of the Pensions Act,
1990. The Trustees have received training and are compliant
with Trustee training requirements.
4.Sponsoring Employer
The Schemes are provided for eligible employees of An Post.
An Post’s registered address is General Post Office, O’Connell
Street, Dublin 1. The Main Scheme is primarily financed by
An Post and details of contributions and other financial
developments during the year are set out in the Trustees’
report in section 8.
5.Contributions
Contributions were paid in accordance with the rules of the
Schemes and the recommendation of the Actuary and were
received in full within 30 days of the Schemes’ year end. The
Trustees are satisfied that appropriate procedures are in
place to ensure that contributions payable are received in
accordance with the legislative requirements set out under
Section 58A of the Pensions Act, where applicable or within
30 days of the Schemes’ year end and in accordance with the
rules of the Schemes and the recommendation of the actuary.
6.Condition of the Schemes
The financial condition of the Schemes is dealt with below
in “Developments during the Year” and in the Financial
Statements, the Actuary’s Statement and the Investment
Report section of this report.
6
7.Statement of Risks
Under the Occupational Pension Schemes (Disclosure of
Information) Regulation, 2006 to 2013, the Trustees are
required to describe the risks associated with the Schemes
and to communicate these to members. A Statement of
Risks, adopted by the Trustees, is included at Appendix 2 to
this report. The Schemes are funded by contributions paid by
the employer and members. Actuarial advice will have been
obtained when setting those contributions. However, there
is no guarantee that the Schemes will have sufficient funds
to pay the benefits promised. It is therefore possible that the
benefits payable under the Schemes may have to be reduced.
If the Schemes are wound up and there is a deficit, the
employer may not be under an obligation to fund the deficit
or, even if the employer is under such an obligation, they may
not be in a position to fund the deficit.
8.Developments during the Year
The value of the Fund’s investments increased during 2014
by 18.7% as both equity and bond markets posted strong
returns. Together, these two asset classes account for the
majority of the Schemes’ investments. Other risk assets also
performed well.
Following the global financial crisis of 2008, equity
markets have experienced volatile yet cumulatively positive
performance, with many market indices recording all
time high levels. Returns have been driven by a moderate
improvement in economic conditions as the year progressed,
particularly in the US. This improvement was supported
by significant actions from central banks and political
authorities around the world which resulted in ultra low
interest rates and additional liquidity in the monetary
system. Noteworthy was the decrease in the value of the
Euro against the US dollar. At the start of 2014, one Euro
bought US$1.37; by year end one euro bought just US$1.21.
This sharp decline had the effect of amplifying returns from
dollar assets when translated back to Euro. The falling value
of the Euro currency has continued into 2015.
The Trustees continued to fund the existing commitments
in the alternative assets portfolio during the year and in
addition funded two new investments, Premier Lotteries
Ireland Limited and Harbert European Growth Capital Fund.
The Trustees were obliged to pay the fourth instalment of
the Pension Levy, which was introduced in 2011. An amount of
€16.5m was paid to Revenue from the assets of the Schemes
in September 2014. This is made up of the fourth instalment
of 0.6% and 0.15%, the latter being the first of a two year levy
payable in 2014 and 2015.
The Investment Report on pages 11 to 19 provides more detail
on the performance of the Fund for the year.
An Post Superannuation Schemes 2014
An actuarial review (an assessment of the actuarial
position of the Schemes on a continuance basis) was
carried out as at 1 January 2013. The result of which was
a deficit in the Fund. Consequently a Minimum Funding
Standard (MFS) funding proposal was submitted to the
Pensions Authority on 8 April 2014 and was subsequently
approved on 19 May 2014. This funding proposal is
currently on schedule to restore the Schemes to a fully
funded position by 2023 (see the Actuary’s statement on
page 20 of this report).
Details of the composition of the Schemes’ net assets at 31
December 2014 are set out in the following table:
The Trustees are required to submit an Actuarial Funding
Certificate to the Pensions Authority every three years.
The certificate states whether or not the Schemes’ assets
are sufficient to meet the Schemes’ liabilities in the event
of a winding up of the Schemes. A copy of this certificate
is included at Appendix 4, and states that the Schemes
did not meet this test on the effective date, 2 January
2013. In addition, the Actuary also prepared a Funding
Standard Reserve Certificate with an effective date of 2
January 2013, in which he stated that the Schemes did
not hold sufficient additional resources to satisfy the
funding standard reserve as provided in section 44(2) of
the Act. A copy of the certificate is included at Appendix
5. Compliance with this legislation is effective from 1
January 2016. Nevertheless, as mentioned in the previous
paragraph, the current MFS funding proposal is on track to
achieve its objective, i.e., to satisfy the Pension Authority’s
Minimum Funding Standard (including the funding
standard reserve) by 31 December 2023.
Property Pooled Investments
128,254
Alternative Investments
151,388
An amendment to the Schemes was submitted to the
Department of Public Expenditure and Reform and the
Department of Communications, Energy and Natural
Resources and was approved on 21 January 2015.
The financial position of the Schemes at the time of
writing this report is broadly in line with the valuation at
year‑end. The Minimum Funding Standard deficit under
the amended Scheme’s rules at year end was €173.0m. This
figure included provision for a Risk Reserve as required by
the Pensions Authority with effect from 1 January 2016.
If the Risk Reserve was excluded, the Scheme would have
been funded.
During 2014, contributions totalled €56.8m (employer –
€52.5m, employees – €4.3m). Transfer values in amounted to
€0.2m. Investment income, net of investment management
expenses of €2.9m, amounted to €26.5m. Benefits and
other payments (including the Pension levy) for which the
Schemes were liable totalled €101.5m. Net movement in
the market value of investments resulted in an increase in
investments of €429.0m. The Schemes achieved a return
of 18.7% on their investments in 2014. At 31 December 2014,
the net assets of the Schemes were valued at €2,608.3m.
An Post Superannuation Schemes 2014
€’000
Quoted Fixed Interest Securities
Unquoted Equities
Unit Trusts
542,770
36,052
1,611,285
Derivative assets
Futures
2,288
Cash Instruments
Cash on deposit
Other Investment Balances
Accrued Investment Income
3,108
147,301
(23,530)
9,986
Derivative Liabilities
Options
(750)
Forward Foreign Exchange (FX)
(727)
Swaps
Total Investments
(2,934)
2,604,491
Current Assets
4,642
Current Liabilities
(819)
Total Fund
2,608,314
The Trustees regularly monitor the strategic asset
allocation of the Schemes’ funds (as set out in the
Statement of Investment Policy Principles at Appendix 1).
The Trustees are satisfied with the year end allocations.
The Bank of New York Mellon Asset Servicing B.V. acts as
global custodian for the Schemes.
Summary investment commentaries for the year, for each
of the investment managers, are set out on pages 12 to
15 of this report. Commentaries on the performance of
the property and forestry investment managers, together
with updates on the alternative investments, and other
investment programmes are set out on pages 15 to 19.
7
Trustees’ Report
Continued
9.Membership Details at 31 December 2014
10.Subsequent Events
The Trustees continue to monitor the Schemes’ funding
position. The Company pledged a contingent asset
which is a portfolio of properties it owns and it signed a
resolution assigning these properties, with the approval
of the relevant Departments on 16 February 2015,
confirming the funding agreement between the parties
and the Trustees. To date the Trustees are on track to
meet the funding requirements by 2023.
2014
2013
9,480
9,736
309
198
Leavers
(619)
(454)
At 31 December
9,170
9,480
2,464
2,377
Additions
274
165
Leavers
(61)
(78)
2,677
2,464
4,139
3,973
235
283
(118)
(117)
4,256
4,139
12. Changes to the Rules of the Schemes
1,279
1,281
92
65
(70)
(67)
1,301
1,279
In 2014 there were no changes to the Schemes’ rules since
the previous year in the information specified in Schedule
C of the Occupational Pension Schemes (Disclosure
of Information) Regulations, 2006 to 2013. In 2015 a
deed of amendment was signed to reflect the changes
agreed between An Post and its Group of Unions. The
most significant changes relate to the Schemes’ normal
retirement age for different classes of members and to
the definition of pay designated as pensionable.
Employed
At 1 January
Additions
Deferred Pensioners
(i.e. former staff of An Post who have
preserved pension entitlements)
At 1 January
At 31 December
Pensioners
(i.e. retired staff of An Post)
At 1 January
Additions
Leavers
At 31 December
Dependants
(i.e. widows, widowers and children
of former staff of An Post)
At 1 January
Additions
Leavers
At 31 December
Markets continued to perform well during the first half
of 2015. The Trustees continue to monitor the investment
strategy with a view to de‑risking and, as a consequence,
reducing the Schemes’ performance volatility.
11.Taxation Status
The Schemes have been approved as an “exempt
approved scheme” for the purposes of Section 774 of the
Taxes Consolidation Act 1997 and so the Schemes’ income
and gains are generally exempt from taxation. An annual
pension levy was introduced by Section 4 of The Finance
(No. 2) Act, 2011 under section 125B of the Stamp Duties
Consolidations Act 1999 which was signed into law on 22
June 2011. This legislation introduced a four‑year annual
levy of 0.6% on the aggregate market value of assets of
private pension funds. In addition in 2013, a further levy
of 0.15% was introduced increasing the levy to 0.75% for
2014 which will fall to 0.15% in 2015.
There are no members of the An Post Main Superannuation
Scheme insured for death in service benefit only.
8
An Post Superannuation Schemes 2014
13.Pension Increases
16. Conclusion
During the year under review, no increases were granted to
pensioners.
In order to produce the material for this report a considerable
amount of research work was carried out on behalf of
the Trustees by staff seconded from An Post and by our
professional advisers. We are grateful to all concerned for
their efforts.
As a consequence, no increases were applied to deferred
benefits, which remain a liability of the Schemes. There are
no pensions or pension increases being paid by or at the
request of the Trustees for which the Schemes would not
have a liability should they wind up.
On behalf of the Trustees
14.Scheme Governance
Trustee Governance/Trustee Knowledge
All Trustees have received formal training by a recognised
third party educational training course provider.
Each Trustee, on appointment, receives formal Trustee
training as part of an induction programme. Serving Trustees
are encouraged to continue to update their knowledge by
attending further training seminars.
Patrick Gallagher
Trustee
Anthony Harmon
Trustee
18 June 2015
Training is provided in a number of ways and by a variety of
service providers. The Actuary and other professional advisors
provide training to some or all of the Trustees in routine
Trustee meetings or in specially arranged training events.
Trustees also avail of the Trustee Forum training sessions
provided by the Irish Association of Pension Funds (IAPF)
and update their knowledge via the on‑line learning facility
available on the Pensions Authority’s website
www.pensionsauthority.ie.
15. Internal Disputes Resolution
In compliance with Article 5 of the Pensions Ombudsman
Regulations 2003, a procedure has been put in place to
facilitate internal dispute resolution. Details of the procedure
are set out in Appendix 3 to this report.
An Post Superannuation Schemes 2014
9
The majority of the assets of the
Schemes are invested in equities and
bonds. The remainder of the assets are
invested in alternative asset classes,
including property.
10
An Post Superannuation Schemes 2014
Investment Report
The assets of the Schemes are vested in the Trustees and,
accordingly, are totally separated from the assets of An Post.
Investment Policy
Investment
Manager
Under the Trust Deed, the Trustees have full power to
decide investment policy and to administer the funds at
their disposal. The monies for investment are allocated
to a number of investment managers and they each
invest according to guidelines set out in an Investment
Management Agreement approved by the Trustees. The
investment managers provide detailed reports to the
Trustees and investment performance is monitored on a
regular basis by the Trustees.
State Street Global Advisors –
Equities and Bonds
Assets
(€’000)
% of
Portfolio
1,295,868
49.8%
499,031
19.2%
148,159
5.7%
JP Morgan – Equities Emerging
Markets
71,716
2.8%
A Statement of Investment Policy Principles (SIPP), in
accordance with Section 35 of the Pensions Act, 1995,
agreed by the Trustees is detailed at Appendix 1. The
majority of the assets of the Schemes are invested in
equities and bonds. The remainder of the assets are
invested in alternative asset classes, including property.
Five investment managers manage the following key
mandates, which together account for 80.0% of the
Schemes’ assets:
Heptagon – Equities Emerging
Markets
56,440
2.2%
PIMCO – Tactical Opps Fund
39,116
1.5%
State Street Global Advisors –
Property
45,745
1.8%
Fidelity Investments – Property
29,577
1.1%
IPUT Property Fund
24,856
0.9%
1. passive global developed equity market – SSgA
Rockspring PIM (LLP) – Property
13,976
0.5%
Irish Forestry Unit Trust
2,918
0.1%
NAFIT – US Forestry
11,182
0.4%
Miscellaneous Bonds
26,222
1.0%
Alder Capital Limited – Currency
28,317
1.1%
6. active emerging markets equity mandate –
Heptagon
Venture Capital
36,052
1.4%
22,714
0.9%
In addition, the Trustees have property investments
with SSgA, IPUT plc, Fidelity Investments, Rockspring
PIM (LLP) and forestry investments with Irish Forestry
Unit Trust (IForUT) and North American Forestry
Investment Trust (NAFIT). The Trustees have committed
to invest in a number of venture capital funds. The
Trustees continue to invest in a number of alternative
investments – in some cases the investment amount
is called down by the manager over a period of time
rather than an upfront investment. These investments
include currency, infrastructure, direct lending, private
equity and forestry.
Premier Lotteries Ireland Ireland
25,000
1.0%
Goldman Sachs – Currency
18,908
0.7%
Czech Asset Management
10,681
0.4%
Coller Capital – Private Equity
8,516
0.3%
Blackstone Capital Partners –
Private Equity
11,311
0.4%
Partners Group – Private Equity
10,218
0.4%
Macquarie – Infrastructure
5,356
0.2%
BlueBay – Corporate Credit
4,000
0.1%
Harbert European Growth Cap
4,604
0.2%
1,762
0.1%
152,246
5.8%
2,604,491
100.0%
2. active fixed interest mandate – PIMCO
3. passive fixed interest mandate – SSgA
4. active global small cap equity mandate – Axa
Rosenberg
5. active emerging markets equity mandate – JP
Morgan and
The Trustees also invested in Premier Lotteries Ireland
Limited, the company operating the National Lottery.
Details of these investments are on pages 16 to 19 of
this report.
Details of the investment holdings at 31 December 2014
are set out in the following table.
An Post Superannuation Schemes 2014
PIMCO – Bonds
AXA Rosenberg – Small Cap
Equities
ILIM/AMP – Infrastructure
BDO Development Fund
Trustee Managed Cash
Total
11
investment Report
Continued
The overall asset allocation of the Schemes’ funds at the end
of 2014 is as follows:
Asset
%
Equities
48.2%
Bonds
32.5%
Alternatives
9.2%
Property
4.3%
Cash
5.8%
The overall currency exposure of the Schemes’ funds at
31 December 2014 is:
Currency
%
Euro
54.0%
USD
29.0%
GBP
4.0%
Yen
3.0%
Other currencies
10.0%
Bank of New York Mellon Asset Servicing B.V. acts as global
custodian for the Schemes.
Summary investment commentaries for the year, from each
of the investment managers, are set out on pages 12 to 15
of this report. Commentaries on the performance of the
property and forestry investment managers, together with
updates on the investments in venture capital, miscellaneous
bonds, alternative assets and other investment programmes
are set out on pages 15 to 19.
Details of how investment management fees are computed
are set out under the “Expenses” heading in the Statement of
Accounting Policies section of this report.
Statement from State Street Global Advisors (SSgA) –
Passive Mandate
SSgA manages a portfolio of passive investments in
State Street Exempt Unit Trusts. The objective of passive
management is to match the return generated by the
relevant market index. The fees associated with passive
management are considerably less than those for active
management.
SSgA manages two separate portfolios: Global Equities and
Eurozone Long Bonds. The individual fund returns for the
year and the portfolio allocation as at 31 December 2014, are
as follows:
12
Portfolio
Value
Portfolio
Fund (Index)
% Performance %
Global Equities
€975.7m
75.3%
19.7% (19.5%)
Eurozone Bonds
€320.2m
24.7%
28.8% (28.9%)
€1,295.9m
100.0%
Total
The opening value of the total assets of the portfolio, on
1 January 2014 was €1,207.2m. A total of €158.0m was sold
from the portfolio during the year: €83.0m from Equities and
€75.0m from Bonds. The closing value at 31 December 2014
was €1,295.9m. The overall return for the year is 22.2%.
In 2014, equity values continued to improve, with many
markets recording all time highs, despite intermittent
uncertainty in the global recovery. A clear divergence
between the US and Eurozone economies began to emerge
as the year progressed. The US recovery was consolidated
with employment, manufacturing and consumer activity
showing positive growth. The U.S. market continued to be
a primary driver of global growth, outperforming other
developed and emerging markets in 2014. In Europe although
the Italian, French and Spanish equity markets contracted,
the German, UK and Irish markets achieved positive returns.
Asia, China and Japan posted positive performances. The
diverging rates of economic recovery meant that overall the
Eurozone lost ground and the Euro weakened considerably
against the US dollar and sterling in the last quarter of 2014.
The geographic split of the Global Equity portfolio reflects
that of the MSCI Global index with almost 60.0% in North
America, 11.0% in the Eurozone and 8.0% each in Japan and
the UK. In USD terms, North American equities increased by
12.0% in 2014, a good return which, when reported in Euro,
translates to a very strong 27.0%.
The European Central Bank committed to further monetary
policy easing with more active intervention in the Eurozone
bond markets towards the end of 2014. The ECB began
buying bonds in October with purchases of asset backed
securities following in November. These programmes and
interest rate reductions have resulted in a further decline
in euro area bond yields and as a result market values
have shown steep improvement. The ECB programme is to
continue until 2016. Healthy returns were achieved in 2014 by
German, Irish and Spanish bonds as borrowing costs fell.
US bond yields are increasing, albeit from extremely low
levels, as the US economy recovers and an increase in
interest rates is expected in the US in 2015. This may impact
EU interest rates which are at near historic low levels. The
consequent very high values of Eurozone bonds led the
Trustees to sell a small portion of bonds from this portfolio
in order to crystallise some of the very large gains in market
value. The intention is to hold the proceeds in cash and
reinvest when interest rates rise and bond market values fall.
An Post Superannuation Schemes 2014
Statement from PIMCO
The mandate of PIMCO is to actively manage a portfolio of
fixed interest investments against a Eurozone long dated
government bond benchmark.
PIMCO‑Bonds
Portfolio
Benchmark
Value
28.9%
28.9%
€499.0m
The opening market value of the portfolio on 1 January 2014
was €426.9m. €50.0m of bonds were sold in December 2014
and the closing value at 31 December 2014 was €499.0m. The
portfolio recorded a return of 28.9% for the year, matching
the benchmark. The majority of the portfolio is invested in
euro government long dated debt.
The very strong return from Government bond markets
in 2014 was driven by the dramatic fall in bond yields over
the course of the year. As yields fall, the price of a bond
increases, resulting in bond prices at year end that were at
historically high levels. The fall in global bond yields has been
a consequence of the response of various Central Banks to
the financial crisis by cutting interest rates and in some case
introducing quantitative easing programmes.
Looking back at 2014, the US remained a bright spot in the
global economy, with a healthy improvement in the labour
market and encouraging GDP growth. In Europe, deflationary
fears, disappointing growth and geopolitical uncertainty
dominated in 2014. Growth in Europe was mixed, with a
stabilisation in the first half of the year followed by mixed
data and differentiated growth between countries. Concerns
over a possible Greek exit from the Euro and persistently
low inflation worried policymakers. The very weak inflation
numbers prompted the ECB to take more aggressive action
to fight deflation. The ECB deposit rate was reduced to
near zero and a series of targeted longer term refinancing
operations were introduced. The ECB commenced its
programme to purchase covered bonds and asset backed
securities in the fourth quarter. 2014 also saw heightened
geopolitical risks around the world and in‑line with such
developments, political support for non‑mainstream parties
grew – the outcome of the Greek elections being particularly
noteworthy. Core and peripheral European government
bond yields declined over the year, supported by ECB
announcements indicating that the impact of full‑blown
quantitative easing was likely to be material.
During 2014 the portfolio generated an absolute return of
28.9%. Our overweight to peripheral (particularly Spanish
and Slovenian) bonds as well as our off‑benchmark
exposure to spread strategies such as covered bonds, and
asset backed securities were positive for performance. Our
duration positioning detracted from performance where our
underweight to the long end of yield curves was negative as
yields moved downwards.
An Post Superannuation Schemes 2014
At year end, the portfolio was generating a yield of 2.9%, a
relatively attractive return in an ultra‑low yield environment.
PIMCO‑Tactical
Opportunities Fund
Portfolio
Benchmark
Value
22.2%
N/A
€39.1m
The Trustees invested €34.0m in the PIMCO Tactical
Opportunities fund in August 2013. This is an opportunistic
credit strategy fund which seeks to capitalise on dislocations
across global credit markets, particularly in structured credit,
due to global deleveraging and increased regulation of banks.
The opening market value of the fund at 1 January 2014 was
€33.2m and at 31 December 2014, the fund was valued at
€39.1m. There was no cash flow during the year. The fund
makes twice yearly distributions to investors and in 2014 we
received US$1.9m in income. The portfolio posted a return of
22.2% in euro terms for the year. The underlying assets are
complex financial securities and derivative instruments and
the manager is currently focused on exposure to real estate
debt, mainly in the US. The relative weakness of the euro
enhanced the more modest local US dollar return of 7.6%.
Statement from Axa Rosenberg – Global Small Cap
Mandate
AXA Rosenberg Investment Management manages a Global
Small Cap equity portfolio. The benchmark against which
performance is measured is the S&P SmallCap Index Global.
Global Small Cap
Portfolio
Benchmark
Value
16.4%
16.4%
€148.2m
The Global Small Cap portfolio had an opening market value
of €136.6m at 1 January 2014. There was a sale of €10.0m from
the portfolio in July 2014. The closing value of the portfolio at 31
December 2014 was €148.2m. The portfolio performed strongly
during 2014 with a return of just over 16.0%, matching its index.
The manager invests in stocks which are defined as small
capitalisation. The benchmark includes the smallest 15.0% of
companies in each developed country, and the average size
of companies in the portfolio is €2.7 billion, as measured by
market capitalisation.
The catalyst for the stock market’s gains was the
strengthening U.S. economy which saw significant
improvements in employment and consumer confidence
data. However, this positive economic momentum was
not shared around the globe and central banks around
the world began their own stimulus packages. This rise in
equity markets also masked significant periods of volatility
with rising geopolitical tensions and concerns about
global economic growth which hit emerging markets and
commodity markets most. Oil prices halved over the final 6
months of 2014 to end the year at US$53 per barrel.
13
investment Report
Continued
Over the full 12 months, the leading sectors were Utilities
and Healthcare. Materials and Telecommunications finished
the year in the red, but it was Energy that was the most
dramatic loser. Risk aversion became an important feature as
investors avoided more volatile shares.
The benchmark against which performance is measured is
the MSCI Emerging Markets Index. The table below shows
the manager’s performance for the year.
Investors generally rewarded the types of characteristics
favoured by our investment process. As a result, buying
stocks that appeared attractive relative to their earnings
was particularly well rewarded over the period. However, the
increase in risk aversion in the second half of the year had a
negative impact on the Fund’s above‑benchmark exposure
to companies with higher levels of beta (a measure of share
price sensitivity to wider market movements).
JP Morgan
Emerging Markets
From an industry perspective, exposure to energy‑related
companies was penalised. Stock selection was rewarded
within the consumer and industrials sectors. Airline stocks
soared towards the end of the year as lower fuel costs
bolstered profits. The Fund moved overweight to Alaska Air,
Hawaiian Airlines and JetBlue in the second half of the year
and these featured among the Fund’s top contributors to
performance.
2014 was a difficult year for Emerging Markets (EM) and
the asset class underperformed developed markets. The
strengthening of the US dollar, the significant fall in oil and
weak commodity prices had a negative impact in general,
though performance across regions and countries varied,
with Asia strongly outperforming Latin America and EMEA.
The manager is overweight in the former and underweight
in the latter two regions. An overweight position in India
and strong stock selection there contributed positively to
performance. Investments in Brazil, Qatar and Thailand
were positive contributors while investments in Russia
and China detracted from performance in 2014. There is
still no clear evidence of a turn in the underlying economic
fundamentals in EM but the manager believes that the
long term story of growth in Emerging Markets remains
compelling and patient, disciplined investors will be
rewarded in the medium term.
AXA Rosenberg believes that opportunities persist for active
managers who are focused on company fundamentals,
as the recent spike in market volatility reinforces the
importance for investors to focus on balance sheet strength
and future earnings.
The Small Cap portfolio holds 688 stocks out of an index of
over 5,600 names. The US dominates the country share of the
portfolio, with 58.5% at year end, followed by the Eurozone at
9.5%, Japan at 8.5% and the UK at 8.3%. There is no exposure
to Ireland. The dividend yield is 2.1%.
Emerging Markets Equities
Investments in emerging markets are made with the
expectation of higher returns than those of developed
markets, as emerging countries are expected to deliver
higher economic growth than their more developed
peers. Such investments can be more risky due to political
instability, infrastructure problems and currency volatility.
To mitigate this risk the Trustees have invested in well
established funds with experienced managers.
Statement from JP Morgan Asset Management
JP Morgan Global Institutional Asset Management was
appointed by the Trustees to manage part of the Emerging
Markets portfolio in April 2013. The fund in which the
Schemes are invested is the JPM Emerging Markets
Opportunities Fund.
14
Portfolio
Benchmark
Value
13.1%
11.4%
€71.7m
The opening market value of the investment at 1 January
2014 was €63.4m. The closing market value of the investment
at 31 December 2014 was €71.7m. There was no cashflow
during the year. The return for 2014 was 13.1%, comfortably
ahead of the benchmark return of 11.4%.
At the end of 2014 the portfolio was invested in 76
companies. The regional split of holdings is: 68.1% in Asia,
15.2% in the Europe/Middle East/Africa region (EMEA),
12.2% in Latin America and 2.5% in developed markets with
cash accounting for 2.1%. The largest individual country
holdings are China (25.4%), Korea (15.3%), Taiwan (12.7%)
and Brazil (9.8%). The portfolio is producing an attractive
dividend yield of 3.6%.
Statement from Heptagon Capital
Heptagon Capital, based in London, is the promoter of the
Oppenheimer Developing Markets Equity Fund, in which the
Trustees invested €50.0m in September 2013. The total size
of this fund is approximately US$865.0m. The underlying
investment manager is US based OFI Institutional Asset
Management who manage US$45bn in Emerging Markets
equity strategies.
An Post Superannuation Schemes 2014
The benchmark against which performance is measured is
the MSCI Emerging Markets Index.
Oppenheimer
Developing Markets
Portfolio
Benchmark
Value
8.8%
11.4%
€56.4m
The opening market value of the investment at 1 January
2014 was €51.9m and the closing market value at 31
December 2014 was €56.4m. The investment return for
the year was 8.8% underperforming the benchmark
return by 2.6%.
The manager’s strategy is to invest in shares of companies
located in developing and emerging markets with
economies, industries and stock markets that are growing
and gaining more stability. It can also invest in companies in
developed markets which derive substantial earnings from
emerging regions. The portfolio is built from the bottom
up by selecting companies characterised by durable (i.e.
non‑cyclical) and above average earnings growth, with
unique and defendable competitive advantages. The fund
in general ignores benchmarks, while adopting an active
management approach to investment.
The manager acknowledges that 2014 was a disappointing
year for the fund. They remain focused on their strategy
which has produced a strong long term track record. At the
end of October 2014, the fund was performing in line with
the benchmark but the sudden collapse in oil prices and the
consequent fall in the currencies of oil producing countries
such as Russia, Mexico and Colombia had a negative impact
on relative performance. The fund had an exposure of
6.0–7.0% to Russia and the 3 worst performing stocks over the
year were Russian companies. In addition there were some
stock picking mistakes in 2014 e.g. Petrobas the Brazilian oil
company and Tullow Oil, the Irish oil exploration company.
The manager believes that the structural growth story for
emerging markets is still intact, driven by factors including
the growing middle class, demographics, education,
urbanisation, advances in technology, and political and
economic reform. The manager believes investors should
remain focused on investing in companies not countries.
The team at Oppenheimer are active managers seeking out
high quality, attractively valued companies, regardless of the
prevailing macroeconomic environment.
The portfolio holds approximately 121 stocks, with the
largest country holdings being China (14.9%), India (12.8%)
and Brazil (13.5%). The top 10 stocks account for 25.0% of
the portfolio value.
Property
The property investments of the Schemes are held in funds
managed by the managers listed in the table below along
with the value of those investments at 31 December 2014:
An Post Superannuation Schemes 2014
Manager
Value
State Street Global Advisors
€45.7m
IPUT plc
€24.9m
FideIity Investments
€29.6m
Rockspring PIM (LLP)
€14.0m
Irish Forestry Unit Trust
€2.9m
North American Forestry Investment Trust
€11.2m
Total
€128.3m
Overall the return on property investments for the year
ended 31 December 2014 was 16.0%.
The following are the reports from each of the investment
managers.
State Street Global Advisors
The Schemes are invested in the SSgA Exempt Property Unit
Trust and this holding was valued at €38.3m on 1 January
2014. There was no cash flow in or out of the fund during
the year. The closing value of the assets at 31 December
2014 was €45.7m. The return on the portfolio for the year
was 22.0%. The fund paid its first distribution of income,
€0.8m, during 2014.
Sectoral Allocation
%
Offices
54.0%
Retail
31.0%
Industrial
15.0%
Geographic Allocation
%
Ireland
77.0%
UK
23.0%
The fund invests in high quality commercial property with
strong cash flows.
2014 was a strong year of recovery for the Irish
commercial property market. Strengthening economic
fundamentals led to the resurgence in investor interest
in the Irish market. Transaction volumes were high
throughout the year with the total value of market deals
at €4.5bn, exceeding the previous peak in 2006. Much of
this activity was amongst domestic buyers. The capital
gains tax exemption introduced for investment property
bought before the end of 2014 was an additional spur.
Although NAMA sold a large number of assets this did
not negatively impact the market. Rental growth has
been robust and the office sector, particularly in prime
locations where supply is limited, continued to lead the
market in 2014.
15
investment Report
Continued
The UK commercial property market had another strong year.
The rate of rental growth has slowed slightly in London but
demand remains strong. Some regional markets are growing
as investors switch attention away from central London
in search of better yields. As in Ireland, the retail sector
continues to lag commercial property.
There are 37 directly held properties in the portfolio with
a net asset value of €242.0m. The manager continues
to focus on actively managing the assets in order to
maintain and improve value and protect income yield.
IPUT Property Fund
The value of the Schemes’ holding in IPUT at 1 January
2014 was €19.6m. Income earned for the year totalled
€1.3m. The closing value of the assets at 31 December
2014 was €24.9m. The return for the year was 33.6%.
The Irish commercial property market continued its
recovery, first evidenced in 2012, and recorded very
strong returns for the year, with the office sector
performing particularly strongly. Ireland’s fast
improving economic indicators provided a strong
backdrop as a wide range of domestic and international
investors sought to invest in the growing economy and
property markets. 2014 was the strongest year ever for
investment in commercial real estate.
IPUT secured a significant amount of new capital
from 22 new investors in 2014, both domestic and
international. This led to a very busy year and the fund
completed purchases of €389.0m, 26 properties in
total, including the property portfolio of the Bank of
Ireland Staff Pension Fund – 13 high quality properties
in Dublin. Other acquisitions included a Dublin city
centre office block at Hanover Reach, office property at
St Stephens Green and a 50.0% interest in a modern
office development in Citywest. The fund also invested
in modern logistical buildings in Citywest, Damastown
and Blanchardstown. In addition the fund acquired
phase I of the Carrickmines retail park.
The availability of prime office space in Dublin
continues to diminish and as a result lease terms are
strengthening, incentives are reducing and tenants
are committing to longer leases. The outlook for retail
units, shopping centres and retail parks in Dublin is
becoming increasingly positive also. It is anticipated
that rental growth in Dublin retail will continue in 2015.
An emerging shortage of larger scale modern logistics
buildings in the city has pushed up industrial rents
although capital values remain low in this sector.
Offices continue to be the leading contributor to
capital growth in the portfolio with consistent rental
growth recovery from all three sectors of the portfolio
underpinning positive returns. The fund remains focused
16
on Dublin which offers a larger, more liquid market with
the best growth potential for capital values and rents.
The portfolio holds 85 properties, with a total fund value
of €1.4bn at year end, of which 98.0% (by value) are
located in Dublin. The sector mix is Office (64.0%), Retail
(25.0%) and Industrial (11.0%). At year end the vacancy
rate across the portfolio stood at 2.0%. The income yield
for the year was 5.7%.
Fidelity Eurozone Select Real Estate Fund
The Trustees have invested a total of €30.0m in this fund,
dating from 2012‑2013. The investment was valued at
€29.0m at 1 January 2014 and €29.6m at year end. Income
received from the fund totalled €1.5m, giving a return for
the year of 7.2%.
Sectoral Allocation
%
Offices
65.0%
Retail
18.0%
Industrial
17.0%
Geographic Allocation
%
France
51.0%
Germany
25.0%
Netherlands
6.0%
Belgium
18.0%
The fund is managed by Fidelity Investments. The
objective of the fund is to deliver an attractive and
stable income return and capital appreciation through
stock selection and active management. The investment
strategy is focused on high quality properties in the core
Eurozone markets of Germany, France and the Benelux
countries. Investment turnover in the core reached its
highest level since 2006, with demand in Germany
particularly strong. Activity is still concentrated in the
core urban centres but there is evidence that investors
are now looking at good secondary locations. Office
supply is at very low levels in the core markets and this
will support increasing rental values into 2015.
At 31 December 2014 the fund had a portfolio of 10
high quality office, retail and warehouse properties. The
investment process is particularly focused on strong
analysis of tenant quality and the goal is to target stable
income with some capital appreciation. The properties
had 98.0% occupancy in 2014 and no rent arrears at year
end. The fund’s income distribution yield is stable at 5.1%.
An Post Superannuation Schemes 2014
Rockspring Property Investment Managers LLP
Rockspring manages investments on behalf of the
PanEuropean Property Limited Partnership and the UK
Retail Plus Property Trust.
Irish Forestry Unit Trust (IForUT) The Scheme is invested in the Irish Forestry Unit Trust,
which owns and manages commercial forests located in
Ireland, with a small holding in Scotland. A restructuring took place during 2014 where 18 assets
in peripheral European countries (Spain, Portugal, Greece
and Hungary) were transferred into a ring‑fenced, closed
end fund. These assets are mainly in retail warehousing
and shopping centres. The remaining 36 assets, largely
in the retail warehousing sector, are located in Germany,
Switzerland, Belgium and Holland.
The forests cover a wide geographic range as well as
diversity in age structure. The value of the holding at
1 January 2014 was €2.8m. At 31 December 2014, the
investment was valued at €2.9m. The fund paid out a
distribution of €0.1m. The overall fund return for 2014
is 8.3%. The major storms in February 2014 caused
significant wind damage to forest assets but the impact
to the Trust was minimised as insurance was in place. The
strong demand for timber facilitated the disposal of high
volumes of storm felled wood. Timber prices remained
robust through 2014. The combination of biological
growth and continued strong pricing will see positive
returns in 2015.
The opening value of the portfolio at 1 January 2014
was €11.6m. The closing value of the combined portfolio
at 31 December 2014 was €10.5m. This closing figure
consisted of €9.5m for the Pan European Property Limited
Partnership and €1.0m for the Rockspring Peripheral
Europe Limited Partnership. Income earned during the
year was €1.0m. The overall return was ‑2.5% for the year.
The investment in the UK Retail Plus Property Trust was
valued at €3.6m at 1 January 2014. The fund invests in
High Street property in secondary UK locations and rental
income is distributed quarterly. Income earned in the
year totalled €0.4m. The fund was valued at €3.4m at 31
December 2014. Unit holders in the Trust voted in 2013
to wind‑up the fund in an orderly three year disposal
programme. The return for 2014 is 8.0%.
LaSalle Euro Growth II Sarl
The fund has been in a wind up process for the past few
years which is now almost complete. There are no more
properties in the fund and the remaining assets are cash
balances and tax reclaims. Distributions totalling €1.1m
were received from the fund in 2014. The Trustees decided
that it would be prudent to write down the value of this
investment to nil at the end of 2014.
North American Forestry Investment Trust (NAFIT)
NAFIT invests in North American forestry funds and
commenced operations in 2009. It operates as a sub‑fund
of Irish Forestry Unit Trust. The Trustees have committed
to invest US$15.0m in NAFIT. US$3.0m was drawn
down during 2014 bringing the total capital invested to
US$12.8m. NAFIT invests in 5 underlying timber funds,
spanning timber holdings in 15 states and Canada. The
investment was valued at US$13.5m/€11.2m at year end.
NAFIT will report a positive return of 5.4% to unit holders
for the year. The manager expects to make distributions
to investors in 2015. The long term return potential
for the fund is positive as the US economic recovery
continues and the demand for timber is expected to give
rise to increased timber prices.
An Post Superannuation Schemes 2014
Venture Capital
Legacy holdings in mature Venture Capital funds were
valued at €1.6m at 1 January 2014 and their closing
value at 31 December 2014 was €1.5m, with distributions
received of €0.02m. The largest holding, valued at €1.4m,
was wound up in early 2015.
The Trustees have committed to invest €40.0m in four
Venture Capital funds, Delta Equity Fund III, Fountain
Healthcare Partners Fund, Seroba Kernel Life Sciences
Fund and Atlantic Bridge II Venture Capital Fund.
Investment in the four funds continued during the year
bringing the total capital drawn down to €31.3m. As
the funds mature they reach a harvesting stage, where
the manager may sell some of the underlying portfolio
companies and return the proceeds to investors. During
the year, three of the funds had successful exits and
returned cash to the Trustees: Seroba €3.2m, Fountain
US$2.7m and Atlantic Bridge US$1.7m. The opening
market value of the four investments at 1 January
2014 was €23.2m. The closing market value of these
investments at 31 December 2014 was €31.1m.
The Trustees committed to invest €8.0m in Frontline
Venture Fund of which €2.8m had been invested at 31
December 2014. This holding was valued at €2.6m at
31 December 2014. The Trustees also agreed to invest
in successor funds from Fountain and Atlantic Bridge,
respectively €10.0m and €20.0m. At 31 December 2014
€1.2m of these commitments had been drawn down.
17
investment Report
Continued
Miscellaneous Bonds The Trustees hold €20.0m in a 20‑year Irish inflation
linked bond, maturing in 2027. The bond pays an annual
coupon linked to the rate of inflation and in 2014 this
income amounted to €0.4m. The investment is a suitable
match for the Schemes’ liabilities and will be held to
maturity. The bond is issued by Bank of Ireland Global
Capital Markets. The Trustees have valued the bond at
€20.0m at year end, reflecting reduced Irish inflation
expectations.
The Trustees hold a 10 year amortising corporate bond
which will mature in 2019. The bond was valued at €6.2m
at year end. The bond pays an annual coupon and this,
together with some capital repayment, amounted to
€1.2m. in 2014.
The Trustees had €10.0m holding of an Irish Government
5.0% 2020 bond. Taking advantage of very strong
bond prices, the holding was sold in October 2014 and
generated a capital gain of €2.9m, in addition to income
earned of €1.9m over the 4 year holding period.
Currency
The Trustees have invested in two currency funds, which
have complementary investment styles. The asset class
is volatile but displays low correlation to equity markets
meaning that performance is not linked to that of
equities, and the longer term risk adjusted performance
profile of currencies is attractive. The fund managed
by Alder Capital Limited is a quantitative, model driven
fund and the fund managed by Goldman Sachs is a
fundamental, decision‑driven fund. The Trustees invested
€25.0m in the Alder fund in December 2010 and invested
€15.0m in the Goldman Sachs fund in April 2011. At year
end, these investments were valued at €28.3m and
€18.9m respectively resulting in returns of 1.8% and 18.7%
respectively.
Private Equity
The Trustees have invested in four Private Equity funds which
cover a complementary range of size and strategies. Together
they provide broad exposure to the asset class;
i. Blackstone Capital Partners VI LP Private Equity fund:
this is one of the world’s largest private equity funds,
with US$16 billion of capital to invest. The Schemes’
commitment is US$20m of which US$12.0m has been
invested. US$0.8m was returned to the Trustees in
distributions in the year. At year end the fund held
investments in 39 companies in the US, Europe and Asia.
The market value of this investment at 1 January 2014
was €4.4m. The investment was valued at €11.3m at 31
December 2014.
ii. Coller International Partners VI is the 6th fund from
Coller, a London firm which specialises in the private
18
equity secondary market. As a secondaries fund, it
purchases positions in existing private equity funds.
Coller VI is a US$5.5bn fund dating from 2012. The
Schemes’ commitment is US$20.0m. and US$2.3m was
drawn down during the year, bringing the total capital
drawn down to US$9.4m by 31 December 2014. The fund
distributed US$2.5m to the Trustees in 2014. The market
value of this investment was US$9.6m/€7.0m on 1
January 2014. The holding was valued at US$10.3m/€8.5m
at 31 December 2014.
iii. Partners Group Secondary 2011 is the fourth fund from
Partners Group, a Swiss based firm specialising in private
market investments. The total fund size is €775.0m of
which the Schemes’ commitment is €15.0m. €7.8m was
drawn down by 31 December 2014 and distributions
of €1.5m were made during 2014. The investment was
valued at €10.2m at year end.
iv. BDO Development Capital Fund is a €75.0m Irish fund set
up to invest equity in mid‑sized indigenous companies
with high growth potential. The Trustees committed to
invest €10.0m, of which €1.8m had been drawn down by
31 December 2014. The fund has made two investments
to date in the healthcare and technology sectors. The
investment was valued at €1.8m at year end.
The Trustees have made a €25.0m equity investment in
Premier Lotteries Ireland Limited, the company which holds
the licence to operate the Irish National Lottery for 20
years. The investment was made as part of a consortium
alongside An Post and the Ontario Teacher’s Pension Plan.
The funds were invested in two tranches in 2014. Over the
lifetime of the licence period, the investment is expected
to pay dividend and interest income to the investors. The
investment was valued at €25.0m at year end.
The Blackstone, Coller and Partners funds are performing in
line with expectations – all report an increase in the value of
their underlying assets and are returning cash to investors.
The BDO fund and the Lottery investments are still at an
early stage in their respective investment cycles.
Infrastructure
Infrastructure as an asset class refers to investment in the
basic physical systems of an economy, such as transportation
(airports, rail, toll roads), utilities (water, gas and electric
networks) and energy (power generators, wind farms). Often,
the assets are State regulated with pricing linked to inflation.
The resulting businesses are stable with strong cashflows.
These characteristics, together with the long life of the assets,
make infrastructure a suitable investment for pension funds.
The Trustees have committed to the following Infrastructure
funds:
i. Irish Infrastructure Fund: managed by Irish Life and
AMP Capital, an Australian infrastructure specialist.
An Post Superannuation Schemes 2014
The Schemes’ commitment is €20.0m, which has been
fully drawn down. The fund paid distributions of €0.9m
during the year. The holding was valued at €22.7m at
31 December 2014. To date, the fund has invested in
a portfolio of wind farms and a portfolio of telecom
towers, in Ireland. The Trustees have agreed to invest
an additional €20.0m, which will be drawn down upon
completion of the purchase of the fund’s next asset, the
Convention Centre Dublin.
ii. Macquarie Infrastructure Fund 4: the parent is Macquarie
Group, a large Australian financial services company. The
Schemes’ commitment is €20.0m, of which €5.5m was
drawn down by year end. The fund paid a distribution of
€0.3m and rebated fees of €0.1m to the Trustees during
the year. The holding was valued at €5.3m at 31 December
2014. The assets in the fund are gas transmission
networks in Germany and the Czech Republic and a share
of 3 UK regional airports.
Additional Investment Programmes
Securities Lending Programme
The Schemes continued their securities lending programme
managed by the Bank of New York Mellon, Asset Servicing
BV. Income is earned by temporarily lending a security to an
investor or a financial intermediary who, in turn, provides
collateral to the Schemes to support the loan. However, as
SSgA manages the bulk of the equity portfolio on a passive
basis, income from the Securities lending programme has
diminished from previous years. Further details of the
lending programme are set out in note 12 to the financial
statements.
Direct Lending
The Trustees are invested in two direct lending funds
managed by Czech Asset Management, L.P, based in the US.
The funds make privately negotiated senior secured loans to
U.S. mid size companies.
The Trustees committed to invest US$15.0m in the SJC
Offshore Capital Finance Fund I, in 2010. At 31 December 2014
the manager had drawn down US$12.6m of the commitment
and returned US$8.5m in distributions. The investment was
valued at US$6.0m at 31 December 2014 and the return on
Fund I is 7.1% per annum.
In February 2013 the Trustees decided to commit US$25.0m
to a follow‑on fund, SJC Offshore Capital Finance Fund II. By
31 December 2014 US$6.3m had been drawn down. The fund
returned US$0.4m in distributions in 2014. The investment
was valued at US$6.4m at 31 December 2014. The return on
Fund II is running at 7.4% per annum.
The Trustees have also committed to invest €10.0m in an
Irish direct lending fund, the BlueBay Ireland Corporate
Credit Fund, which raised €450.0m to lend to Irish small to
medium size companies (SMEs). By 31 December 2014 €4.0m
of our commitment had been drawn down and the fund had
made ten investments. The investment was valued at €4.0m
at year end.
The Trustees made a commitment to invest €10.0m in the
Harbert European Growth Capital Fund. The fund invests in
later stage growth European companies via secured loans.
By year end the fund had invested in 19 companies primarily
in the software and communications sectors, mainly in
the UK and Germany. By 31 December 2014 €4.6m of our
commitment had been drawn down. The fund returned
€0.1m in distributions in 2014. The investment was valued at
€4.6m at year end.
An Post Superannuation Schemes 2014
19
Actuary’s
Statement
The most recent Actuarial Funding Certificate submitted to the Pensions Authority in
respect of the An Post Superannuation Schemes (the An Post Main Superannuation
Schemes 1990 to 2015 and the An Post Spouses’ and Children’s Contributory Pension
Scheme, 1990) had an effective date of 2 January 2013. It confirmed that, at that date,
the combined scheme did not satisfy the funding standard specified in Section 44 of the
Pensions Act, 1990.
The last Funding Standard Reserve Certificate was also prepared with an effective date
of 2 January 2013. This certificate confirmed that the combined scheme did not hold
sufficient additional assets to satisfy the funding standard reserve at that effective date.
A funding proposal to enable the combined scheme to meet the funding standard
(including the funding standard reserve) over the period to end 2023 was submitted to,
and approved by, the Pensions Authority during 2014.
I am reasonably satisfied that the current funding proposal remains on track to achieve
its objective. Taking account of the value of assets and the value of liabilities as at 31
December 2014, I am reasonably satisfied that the combined scheme is expected to
satisfy the funding standard (including the funding standard reserve) no later than 31
December 2023.
Michael Madden,
FSAI
9 June 2015
20
An Post Superannuation Schemes 2014
Statement of Trustees’
Responsibilities
The financial statements are the responsibility of the Trustees. Irish pension scheme
regulations require the Trustees to make available to the Schemes’ members, beneficiaries and
certain other parties, audited financial statements for the Schemes’ year which:
• show a true and fair view of the financial transactions of the Schemes during the year and
of the disposition of their assets and liabilities at the Schemes’ year end. For this purpose,
assets do not include insurance policies which are specifically allocated for the provision
of benefits for, and which provide all the benefits payable under the Schemes to, particular
members; liabilities do not include liabilities to pay pensions and benefits after the end of
the year.
• contain the information specified in the Occupational Pension Schemes (Disclosure of
Information) Regulations, 2006 to 2013 including a statement as to whether the financial
statements have been prepared in accordance with the Statement of Recommended
Practice: Financial Reports of Pension Schemes (Revised May 2007), (the SORP).
The Trustees have supervised the preparation of the financial statements and have agreed
suitable accounting policies to be applied consistently, making any estimates and judgements
on a prudent and reasonable basis. The SORP has been complied with in preparing these
financial statements and particulars of any material departures have been disclosed and
explained.
The Trustees are responsible for ensuring that, insofar as is reasonable, the contributions
payable by the employer and members of the Schemes are received in accordance with the
Schemes’ rules, the Actuary’s recommendation and requirements of legislation.
The Trustees have general responsibility for ensuring that proper membership and financial
records are kept and for taking such steps as are reasonably open to them to safeguard the
assets of the Schemes and to prevent and detect fraud and other irregularities, including the
maintenance of appropriate internal controls. The Trustees also have responsibility for ensuring
that the Schemes are registered with The Pensions Authority, the registration details are
updated at least once a year, and that the annual fee is paid.
On behalf of the Trustees
Patrick Gallagher
Trustee
Anthony Harmon
Trustee
18 June 2015
An Post Superannuation Schemes 2014
21
Independent Auditor’s
Report to the Trustees
of the An Post
Superannuation Schemes
We have audited the financial statements of the An Post
Superannuation Scheme for the year ended 31 December
2014, which comprises the fund account, the net assets
statement and the related notes. The financial reporting
framework that has been applied in their preparation is
Irish law and accounting standards issued by the Financial
Reporting Council and promulgated in Ireland by Chartered
Accountants Ireland (Generally Accepted Accounting Practice
in Ireland).
This report is made solely to the Scheme Trustees as a body,
in accordance with the Pensions Act, 1990 and Regulations
made thereunder. Our audit work has been undertaken so
that we might state to the Scheme Trustees those matters
we are required to state to them in an auditor’s report and
for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other
than the Scheme Trustees as a body, for our audit work, our
work on contributions, for this report, or for the opinions we
have formed.
Respective responsibilities of the Trustees and
independent auditor
As explained more fully in the Statement of Trustees’
responsibilities set out on page 21 the Scheme Trustees
are responsible for the preparation of financial statements
which give a true and fair view. Our responsibility is to
audit and express an opinion on the financial statements
in accordance with Irish law and International Standards
on Auditing (UK and Ireland). Those standards require us to
comply with the Ethical Standards for Auditors issued by the
Financial Reporting Council.
Opinion on financial statements
In our opinion, the financial statements show a true and
fair view, in accordance with Generally Accepted Accounting
Practice in Ireland, of the financial transactions of the
Scheme during the year ended 31 December 2014 and
of the amount and disposition at that date of its assets
and liabilities other than liabilities to pay pensions and
benefits after the end of the Scheme year, and contain the
information specified in the Occupational Pension Schemes
(Disclosure of Information) Regulations, 2006 to 2013.
Additional matters on which we are required
to report by the Occupational Pension Schemes
(Disclosure of Information) Regulations, 2006 to 2013
In our opinion, the contributions payable to the Scheme
during the year ended 31 December 2014 have been received
by the Trustees within 30 days of the end of the Scheme year,
and have been paid in accordance with the Scheme rules and
the recommendations of the Actuary.
Jon D’Arcy
KPMG
Chartered Accountants, Statutory Audit Firm
1 Harbourmaster Place
IFSC
Dublin 1
18 June 2015
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts
and disclosures in the financial statements sufficient to
give reasonable assurance that the financial statements
are free from material misstatement, whether caused by
fraud or error. This includes an assessment of: whether
the accounting policies are appropriate to the Scheme’s
circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant
accounting estimates made by the Trustees; and the overall
presentation of the financial statements. In addition, we read
all the financial and non‑financial information in the annual
report to identify material inconsistencies with the audited
financial statements. If we become aware of any apparent
material misstatements or inconsistencies we consider the
implications for our report.
22
An Post Superannuation Schemes 2014
Statement of
Accounting Policies
The following accounting policies have been applied
consistently in dealing with items which are considered
material in relation to the Schemes’ financial statements.
Basis of Preparation
The financial statements have been prepared in accordance
with the Occupational Pension Schemes (Disclosure of
Information) Regulations, 2006 to 2013 and the guidelines
set out in the Statement of Recommended Practice:
Financial Reports of Pension Schemes (Revised May 2007)
issued by the Pensions Research Accountants Group. The
accounts have been prepared in accordance with applicable
accounting standards generally accepted in Ireland.
Accounting standards generally accepted in Ireland in
preparing accounts showing a true and fair view are those
published by the Institute of Chartered Accountants in
Ireland and issued by the Financial Reporting Council.
The financial statements summarise the transactions of
the Schemes and deal with the net assets at the disposal
of the Trustees. They do not take account of obligations
to pay pensions and other benefits which fall due after
the end of the Schemes’ year. The actuarial position of the
Schemes, which does take account of such obligations,
is dealt with in the latest actuarial valuation at 1 January
2013. The Actuary’s statement and the Actuarial Funding
Certificate on pages 20 and 46 respectively and the
financial statements should be read in conjunction with
this valuation.
The figures in the financial statements are presented in
euro thousands (€’000).
Accruals Concept
The financial statements have been prepared on an accruals
basis, except where stated otherwise below.
Fixed Interest Securities
Fixed interest securities are included at fair value at the date
of the net assets statement, estimated by the Trustees based
on advice from the investment manager.
Unquoted Securities
Unquoted securities are stated at their fair value at the date
of the net assets statement, estimated by the Trustees based
on advice from the investment manager.
Unit Trusts and Managed Funds
Pooled investment vehicles are stated at their market price
which is the bid price for funds with bid/offer spreads, or
single price where there are no bid/offer spreads, as provided
by the investment manager at the date of the net assets
statement.
Property
Property funds, managed by SSgA and IPUT plc are stated
at their fair value at the date of the net assets statement,
estimated by the Trustees based on advice from the
investment manager. Property within these funds are
included at open market value as at 31 December 2014
determined in accordance with the RICS Valuation Standards
(7th edition). Property valuations are carried out by an
external valuer every three years. In the intervening years, the
Trustees, on advice from the investment managers, update
the valuations.
Property held by Fidelity International and Rockspring
PIM (LLP) was valued at 31 December 2014 at open market
value by independent valuers, in accordance with the RICS
Valuation Standards (7th edition). Property held by Irish
Forestry Unit Trust is independently evaluated every one
to five years, depending on its position in the growth cycle.
Property held by NAFIT reflects the underlying manager
accounts data at 31 December 2014.
Transaction Costs
Transaction costs are included in the cost of purchases and
sale proceeds, and acquisition costs are included in the
purchase cost of investments.
Derivatives
The Trustees have authorised the use of derivatives by their
investment managers as part of their overall investment
strategy for the Schemes. Derivatives are required to be
reported at their fair value at the date of the net assets
statement. This is the bid price for asset positions and the
offer price for liability positions. Where there is no bid/offer
spread available, the mid, single price is used. The valuation
policies applied to derivatives held at the year end are
summarised as follows:
Quoted Securities
The majority of listed investments are stated at the bid price
or the last traded price, depending on the convention of the
stock exchange on which they are quoted, at the date of the
net assets statement.
Options
Options are valued at their mark to market value. If a quoted
price is not available on a recognised exchange, the fair value
is calculated using pricing models, where the inputs are
based on market data at the year end date.
Investments
Valuation of Investments
Investments are included at market value.
An Post Superannuation Schemes 2014
23
Statement of
Accounting Policies
Continued
Futures
Open futures contracts are included in the net assets
statement at their fair market value, which is unrealised
profits or losses at the current bid or offer market quoted
price of the contract. Amounts due from the broker represent
the amounts outstanding in respect of the initial margin
(representing collateral on the contracts) and any variation
margins which are due to or from the broker. The amounts
included in the change in market value are the realised gains
or losses on closed futures contracts and the unrealised
gains or losses on open futures contracts.
Swaps
The fair values are calculated using pricing models where
inputs are based on market data at the date of the net assets
statement. Interest is accrued monthly on a basis consistent
with the terms of each contract. The change in market value
includes the realised gains or losses on closed contracts and
the unrealised gains or losses on open contracts. Net receipts
or payments on swap contracts are reported within changes
in market value.
Foreign Forward Exchange Contracts
Foreign forward exchange contracts consist of any contracts
outstanding at the year end and are stated at fair value
which is determined as the gain or loss that would arise if
the outstanding contract was matched at the year end with
an equal and opposite contract.
Exchange traded derivatives are stated at market values
determined using market quoted prices.
For exchange traded derivative contracts which are assets,
market value is based on quoted bid prices. For exchange
traded derivative contracts which are liabilities, market value
is based on quoted offer prices.
Over the Counter (OTC) derivatives are stated at market
value using pricing models and relevant market data as at 31
December 2014.
All gains and losses arising on derivative contracts are
reported within ‘Change in Market Value’.
Investment Income
Dividends from quoted securities are accounted for when the
security is declared on an ex‑dividend basis.
Interest is accrued on a daily basis.
Investment income is reported net of attributable tax
credits but gross of withholding taxes, which are accrued in
line with the associated investment income. Irrecoverable
withholding taxes are reported separately as a tax charge in
the financial statements.
24
Investment income arising from the underlying
investments of the pooled investment vehicles is
reinvested within the pooled investment vehicles and
reflected in the unit price. It is reported within ‘Change in
Market Value’ in the financial statements.
Contributions
Employee normal contributions are accounted for when
deducted from pay.
Employer normal contributions are accounted for as they
fall due in accordance with the rate agreed between
the Trustees and the Company for the year and as
recommended by the Actuary.
Employer augmentation contributions are accounted for
in accordance with the agreement under which they are
being paid.
Payments to Members
Benefits are accounted for in the period in which the
member notifies the Trustees of the date of retirement
or leaving.
Transfers
Individual transfers in or out of the Schemes are
accounted for when received or paid which is normally
when member liability is accepted/discharged. All
the values are based on methods and assumptions
determined by the Actuary to the Schemes.
Expenses
Investment management fees for equity and fixed
interest managers are calculated each quarter in
arrears, based on the market value of the assets under
management and are computed using a sliding scale
rate. The remaining investment managers’ fees are
calculated in arrears, based on fixed percentage rates
of the assets under management on a monthly or
quarterly basis. In addition most of the alternative
investment management fees are calculated on a base
fee plus performance basis. The Schemes bear the
costs of the investment managers’ fees. The full cost of
the investment management fees together with the
associated VAT costs, are reflected in the investment
management expenses within the Fund Account and all
expenses are accounted for on an accrual basis.
Pension Levy
The pension levy is calculated on the basis of the
aggregate market value of the Scheme’s assets (excluding
contingent assets) held as at the effective date and is
accounted for as it falls due.
An Post Superannuation Schemes 2014
Fund Account for year
ending 31 December 2014
Note
2014
(€‘000)
2013
(€‘000)
1
2
56,750
206
64,123
353
56,956
64,476
(83,056)
(1,249)
(682)
(83,160)
(922)
(25)
(84,987)
(84,107)
(28,031)
(19,631)
29,416
428,957
(2,899)
23,374
191,416
(2,926)
455,474
211,864
(16,480)
(12,103)
Net increase in the fund during the year
410,963
180,130
Net assets of the Schemes at beginning of year
2,197,351
2,017,221
2,608,314
2,197,351
Contributions and Benefits
Contributions receivable
Individual transfers in
Benefits payable
Administration expenses
Individual transfers out
3
5
4
Net withdrawals from dealings with members
Returns on investments
Investment income
Change in market value of investments
Investment management expenses
6
7
8
Net returns on investments
Pension Levy
9
Net assets of the Schemes at end of year
The notes on pages 27 to 37 form part of the Financial Statements.
On behalf of the Trustees
Patrick Gallagher
Trustee
Anthony Harmon
Trustee
18 June 2015
An Post Superannuation Schemes 2014
25
Net Assets Statement
at 31 December 2014
Assets
Investments
Current assets
Current liabilities
Net current assets
Net assets of the Schemes at end of year
Note
2014
(€‘000)
2013
(€‘000)
7
10
11
2,604,491
4,642
(819)
2,195,145
3,039
(833)
3,823
2,206
2,608,314
2,197,351
The notes on pages 27 to 37 form part of the Financial Statements.
The accounts summarise the transactions of the Schemes and deal with the net assets at the disposal
of the Trustees. They do not take account of obligations to pay pensions and benefits which fall due
after the end of the Schemes’ year. The actuarial position of the Schemes, which does take account
of such obligations, is dealt with in the Actuary’s statement and the actuarial funding certificate
included in the Annual Report and these accounts should be read in conjunction with them.
On behalf of the Trustees
Patrick Gallagher
Trustee
Anthony Harmon
Trustee
18 June 2015
26
An Post Superannuation Schemes 2014
Notes Forming Part of
the Financial Statements
1. Contributions Receivable
An Post
Normal
Augmentation*
Members
Spouses’ and Children’s Pension Scheme
Purchase of added years
Employee 5.0% contribution
2014
€’000
2013
€’000
47,851
4,627
49,026
10,532
2,271
240
1,761
2,529
341
1,695
56,750
64,123
206
353
61,621
11,747
393
59,303
14,235
502
73,761
74,040
9,295
9,120
83,056
83,160
682
25
*On the recommendation of the Actuary, the contribution augmentation from An Post was paid to
meet the additional costs to the Schemes, resulting from the Company’s voluntary exit schemes.
2. Individual Transfers In
Individual transfers from other Revenue approved Schemes
3. Benefits Payable
Superannuation Scheme
Pensions
Lump sums
Mortality benefits
Spouses and Children’s Pension Scheme
Pensions
4. Transfers Out
Individual transfers to other Revenue Approved Schemes
An Post Superannuation Schemes 2014
27
Notes Forming Part of
the Financial Statements
Continued
5. Administration Expenses
Management expenses
Auditors remuneration
2014
€’000
2013
€‘000
1,215
34
888
34
1,249
922
16,818
2,413
8,403
1,782
15,829
499
6,017
1,029
29,416
23,374
6. Investment Income
Income from fixed interest securities
Dividends from equities
Income from unitised property funds
Interest on cash deposits and other income
As the majority of equities are managed by SSgA within a pooled fund, the manager immediately
re‑invests income earned. Consequently the income earned figure forms part of the closing
market value figure and the irrecoverable withholding tax is not separately identifiable. Income
earned within the SSgA investment funds for the year ended 31 December 2014 amounted to
€34.1m (2013: €39.0m) and was reinvested and reflected in the closing market value figure.
Interest on cash deposits and other income includes income earned from Securities
Lending of €17,665 (2013: €27,357). Income from the Securities Lending programme
has decreased as SSgA manages the portfolio on a passive basis.
28
An Post Superannuation Schemes 2014
7.Investments
Market
Value
01/01/2014
Fixed Interest Securities
Equities
Unit Trusts
Property
Alternatives
Derivatives
Futures
Options
Swaps
Forward FX
Cash Instruments
Cash Deposits
Other Investment balances
Outstanding dividends
& interest receivable
Total investments
Sales
Proceeds and
Derivative
Receipts
€’000
Change in
Market
Value
Market
Value
31/12/2014
€’000
Purchases
At Cost and
Derivative
Payments
€’000
€’000
€’000
545,939
24,763
1,492,284
113,454
96,408
1,453,223
10,179
142,931
2,444
57,125
(1,541,235)
(8,507)
(310,657)
(68)
(14,832)
84,843
9,617
286,727
12,424
12,687
542,770
36,052
1,611,285
128,254
151,388
(913)
(132)
131
2,183
4,279
7,487
62,509
20,431
(25,913)
(8,787)
(68,776)
(16,268)
24,835
682
3,202
(7,073)
2,288
(750)
(2,934)
(727)
24,973
2,163,781
(2,186,214)
568
3,108
2,299,090
3,924,389
(4,181,257)
428,512
2,470,734
4,144
(117,513)
372
147,301
(23,530)
9,424
73
9,986
2,195,145
428,957
2,604,491
Investment Reconciliation table
The change in market value of investments during the year comprises all increases and
decreases in the market value of investments held at the year end, profits and losses realised
on the sale of investments held during the year and foreign exchange differences arising on
the translation of investments denominated in foreign currencies.
An Post Superannuation Schemes 2014
29
Notes Forming Part of
the Financial Statements
Continued
7.Investments (Continued)
Where the investments are held in unitised funds, the change in market value also includes expenses
both implicit and explicit for the year and any reinvested income, where the income is not distributed.
There are no material restrictions or financial penalties on the realisation of investments.
The cash flows relating to derivatives are recognised in the investment reconciliation table as follows:
Futures – on close out or expiry of the futures contract the variation margin balances held in respect of
unrealised gains or losses are recognised as cash receipts or payments in the investment reconciliation
table, depending on whether there is a gain or loss.
Options – premiums paid and received are reported as payments or receipts in the table together with
any close out costs or proceeds arising from early termination.
Swaps – the payments or receipts under the swap contract are reported in the reconciliation table,
together with any close out costs or proceeds arising on early termination.
Forward Foreign Exchange – the forward FX trades settled during the period are reported within the
table. To recognise Forwards from the Spot FX trades the following rule is used:
FX trades are classified as a Spot trade if there is less than (or equal to) 5 days between trade and settle
dates. FX trades are classified as Forwards if there are more than 5 days between trade and settle dates.
Transaction Costs – are included in the cost of purchases and sale proceeds and include costs charged
directly to the Schemes such as fees, commissions, stamp duty and other fees.
Transaction costs incurred during the year are not separately identifiable as indirect costs incurred
through the bid‑offer spread on investments within pooled investments vehicles have not been
separately provided to the Schemes.
30
An Post Superannuation Schemes 2014
7.Investments (Continued)
Other investment balances consist of the following:
Description
2014
(€’000)
2013
(€’000)
Payables for investment purchases
Receivables for investments sold
(25,769)
2,239
(280,206)
162,693
Total
(23,530)
(117,513)
Derivative Contracts
Objectives and Policies
The Trustees have authorised the use of derivatives by their investment managers as part of their investment
strategy for the Schemes. Investments in derivative instruments may only be made if they contribute to a
reduction of risk or facilitate efficient portfolio management (including reduction of the cost of generation of
additional capital or income with an acceptable level of risk) and such investments must be made and managed
so as to avoid excessive risk exposure to a single counterparty.
Details of the classes of derivatives held at the year end are summarised as follows:
Futures Contracts
The Schemes have open future contracts relating to the Euro Bond portfolio at the year end as follows:
Type of Future
Euro Bond Futures Purchased
Euro Bond Futures Sold
Expiration
Economic
Exposure Value
(€’000)
at 31 Dec 14
Market Value
(€’000)
at 31 Dec 14
Less than 1 Year
Less than 1 Year
183,324
(115,423)
2,385
(97)
67,901
2,288
Total
There was no collateral held at the year end in respect of future contracts amounts (2013: nil).
An Post Superannuation Schemes 2014
31
Notes Forming Part of
the Financial Statements
Continued
7.Investments (Continued)
Options
The Schemes have outstanding option contracts at the year end as follows:
Type of Options
Expiration
Underlying
Investment
Bond Put Option
Bond Put Option
Bond Call Option
Bond Call Option
Bond Call Option
Stock Call Option
Stock Put Option
Less than 1 Year
Less than 1 Year
Less than 1 Year
Less than 1 Year
Greater than 1 Year
Less than 1 Year
Less than 1 Year
Euro Bond
GBP Bond
Euro Bond
GBP Bond
Euro Bond
JPY/USD Spot
USD/EUR Spot
Sub Totals
Economic
Exposure of
Outstanding
Contracts
€’000
(68,100)
(24,700)
(40,001)
(24,700)
22,730
(6,500)
(14,700)
(155,971)
Asset Value
at 31 Dec 14
€’000
Liability Value
at 31 Dec 14
€’000
(32)
(13)
(439)
(156)
(34)
(42)
(34)
‑
(750)
Net total
(750)
Swaps
The Schemes had derivative contracts outstanding at the year end relating to their fixed income investment portfolio.
These are traded over the counter and details are as follows:
Nature
Credit Default Swaps Euro
Credit Default Swaps US$
Credit Default Swaps US$
Interest Rate Swaps Euro
Notional
Principal
Duration
–
–
–
–
Less than 1 Year
Less than 1 Year
More than 1 Year
More than 1 Year
Sub totals
Asset Value
at 31 Dec 14
€’000
Liability value
at 31 Dec 14
€’000
(313)
(870)
(938)
(813)
Nil
(2,934)
Net Total
Collateral held at the year end in respect of Swaps totalled €3.3m (2013: US$ 4.1m).
32
An Post Superannuation Schemes 2014
7.Investments (Continued)
Forward Foreign Exchange (FX)
The Schemes had open FX contracts at the year‑end as follows:
Contract
Forward OTC
Settlement
Currency
Currency
Sold
‘000
Feb 15
USD
CHF
EUR
USD
AUD
GBP
JPY
EUR
EUR
USD
EUR
DKK
105
19,316
25,003
8,350
2,131
28,118
2,864,700
1,663
3,874
1,684
1,233
37,713
Apr 15
Sub Totals
Net total
An Post Superannuation Schemes 2014
Currency
Currency
Purchased
‘000
MXN
EUR
USD
EUR
EUR
EUR
EUR
GBP
CHF
JPY
JPY
EUR
1,531
16,088
31,302
6,761
1,454
35,147
19,292
1,318
4,654
200,067
181,094
5,060
Asset Value
at 31 Dec 14
€’000
Liability
Value at
31 Dec 14
€’000
(1)
18
853
(137)
18
(1,057)
(452)
34
(2)
(12)
15
(4)
938
(1,665)
(727)
33
Notes Forming Part of
the Financial Statements
Continued
7. Investments (Continued)
2014
€’000
2013
€’000
Fixed interest securities
Eurozone public sector quoted
381,752
284,341
Eurozone other quoted
131,900
147,138
Investments at Market Value
Rest of world public sector quoted
3,952
4,315
25,166
110,145
542,770
545,939
Equities
Eurozone unquoted
36,052
24,763
Property Funds
Eurozone Property
117,072
106,228
11,182
7,226
128,254
113,454
Rest of world other quoted
Non Eurozone Property
Unit Trusts
Eurozone other than property
1,295,855
1,207,161
Rest of world other than property
187,275
169,856
Emerging markets other than property
128,155
115,267
1,611,285
1,492,284
120,879
74,918
30,509
21,490
151,388
96,408
Alternative Investments
Eurozone
Non Eurozone
Derivatives
Forward FX
Futures
Swaps
Cash Instruments
Euro
Foreign currency
Sub Total
34
‑
2,183
2,288
‑
‑
131
2,288
2,314
209
20,804
2,899
4,169
3,108
24,973
2,475,145
2,300,135
An Post Superannuation Schemes 2014
7. Investments (Continued)
Investments at Market Value
Cash
Other Investment Balances
Outstanding dividends, interest receivable
Derivative Liabilities
Forward FX
Swaps
Futures
Options
Total Investments
2014
€’000
2013
€’000
147,301
(23,530)
9,986
4,144
(117,513)
9,424
(727)
(2,934)
‑
(750)
‑
‑
(913)
(132)
2,604,491
2,195,145
2,899
2,926
16,480
12,103
783
267
2
41
3,816
1040
50
1,682
4,642
3,039
819
833
8. Investment Management Expenses
Administration, management and custody fees charged in accordance with the
relevant investment mandates and custody contracts.
9. Pension Levy
The Trustees were required to make a payment to Revenue in respect of a mandatory
pension levy calculated at 0.6% of the Schemes’ asset value. The amount was paid
over to Revenue under the terms of the Finance (No 2) Act 2011. The Act imposed
an annual levy at 0.6% of the of the Schemes’ asset value for the years 2011 to 2013
inclusive, 0.75% was payable in 2014 and a new levy of 0.15% is payable for 2015.
10. Current Assets
Income tax recoverable
Cash at bank
Sundry Debtors
Balance due from An Post
11. Current Liabilities
Accrued expenses
The accrued expenses are primarily comprised of outstanding Investment manager fees at the year end
An Post Superannuation Schemes 2014
35
Notes Forming Part of
the Financial Statements
Continued
12.Securities Lending
The Schemes participate in a securities lending programme which involves the temporary transfer of a security
from its owner to another investor or financial intermediary. It is a low risk means of earning additional income
and enhancing portfolio performance. Borrowers are typically investment banks or brokers/dealers who require
securities to satisfy short positions, in which the borrower sells a security it does not currently own and borrows a
security to settle the sale and then buys it back at a later date and returns it to the lender.
When securities are lent, the lender retains all beneficial ownership entitlements including dividends, interest
payments, rights issues and other corporate actions. The Schemes’ securities lending programme is managed
by the Bank of New York Mellon, Asset Servicing B.V. Under the programme, loans are made to approved
counterparties who meet minimum credit criteria. They are secured by collateral in the form of government
bonds, bonds of specified supranational issuers and specified equity index baskets.
The value of the collateral maintained by the custodian must be at least 102.0% of the market value of securities
lent, where the collateral is in the same currency as the loaned security and 105.0% otherwise. All loans are
structured in a manner which allows the Schemes to terminate the loans at any time.
The total amount of equity on loan at 31 December 2014 was €15,404,864 (2013: €3,279,740) and the collateral
held in respect of these loans totalled €15,885,534 (2013: €3,377,815). The equity on loan is included in the net
assets at the year end.
13.Concentration of Investments
The following investments accounted for more than 5.0% of the net assets of the Schemes at 31 December 2014:
SSgA EUT Global Developed Index Equity Fund
SSgA EUT Euro Long Bond Index Fund
Axa Rosenberg Global Small Cap Alpha Fund
€’000
% of net assets
975,634
320,220
148,159
37.4%
12.3%
5.7%
The following investments accounted for more than 5.0% of the net assets of the Schemes at 31 December 2013:
SSgA EUT Global Developed Index Equity Fund
SSgA EUT Euro Long Bond Index Fund
Axa Rosenberg Global Small Cap Alpha Fund
€’000
% of net assets
895,732
311,431
136,618
40.8%
14.2%
6.2%
No single investment in any of the pooled investment vehicles listed above comprised more than 5.0% of the net assets of the
Schemes at 31 December 2014.
14.Self Investment
There was no self investment at any time during the Schemes’ year.
36
An Post Superannuation Schemes 2014
15.Related Party Transactions
Five Trustees who are employees of An Post are also members of the Schemes and contributions to the Schemes include
contributions in respect of those Trustees. The Chairman receives an annual fee for his services to the Schemes. All other
Trustees did not receive and are not due any remuneration from the Schemes. Staff in the Pensions Administration Section of
An Post have been seconded to the Schemes since 1 January 2002.
The custodian and investment managers are appointed by the Trustees to manage the Schemes’ assets. All are remunerated
on a fee basis calculated as a percentage of the assets under management. These fees which are borne by the Schemes
amounted to €2.9m (2013 €2.9m) of which €0.7m (2013: €0.7m) was outstanding at the year end. At 31 December 2014 a total
of 75.5% (2013: 68.0%) of the net assets of the Schemes are invested in products of the investment managers.
An Post is the principal employer and employer contributions have been made in accordance with the trust deed and rules and
the recommendations of the Actuary. The Schemes bear all of the administration and investment management expenses.
Mercer Consulting provides actuarial services to the Trustees and the fees for such services are borne by the Schemes.
There were no other related party transactions requiring disclosure in these financial statements.
16.Contingent Liabilities and Contractual Commitments
These financial statements do not take account of liabilities to pay pensions and other benefits in the future. On this
basis, in the opinion of the Trustees, the Schemes had no contingent liabilities or contractual commitments at the year
end apart from the following;
Undrawn Commitment at
Total
Commitment
31 Dec 2014
31 Dec 2013
Fund
million
million
million
Venture Capital funds
Macquarie Infrastructure Fund 4
Irish Infrastructure Fund
Partners Group Secondary 2011
BDO Development Capital Fund
BlueBay Ireland Corporate Credit Fund
Harbert European Direct Lending
SJC Offshore Capital Finance Fund II
Blackstone Capital Partners’ VI Fund
Coller International Partners VI
North American Forestry Investment Trust
SJC Offshore Capital Finance Fund I
€78.0
€20.0
€20.0
€15.0
€10.0
€10.0
€10.0
US$25.0
US$20.0
US$20.0
US$15.0
US$15.0
€42.8
€14.5
€20.0
€7.2
€8.2
€6.0
€5.4
US$18.7
US$8.9
US$10.6
US$2.2
US$2.4
€13.4
€16.3
€11.9
€10.0
€8.0
‑
US$20.4
US$14.9
US$12.9
US$5.2
US$2.4
Details of these investments are noted on pages 16 to 19 of this report.
17.Subsequent Events
The amended Scheme was signed by the Minister for Communications, Energy and Natural Resources, the Minister for Public
Expenditure and Reform and An Post on 21 January 2015.
18. Approval of Financial Statements
The financial statements were approved by the Trustees on 18 June 2015.
An Post Superannuation Schemes 2014
37
Appendix 1
Statement of Investment
Policy Principles
Introduction
The purpose of this Statement of Investment Policy Principles (the “Statement”) is to document the policies and
guidelines that govern the management of the Schemes’ assets. It has been reviewed and adopted by the Trustees; it
outlines the responsibilities, objectives, policies and risk management processes in order that:
1. There is a clear understanding on the part of the Trustees, consultants, investment managers and others as to the
objectives and policies of the Trustees;
2. There are clear principles governing the guidelines and restrictions to be presented to the investment managers
regarding their investment of the Schemes’ assets;
3. The Trustees have a meaningful basis for the evaluation of the investment performance of the individual
investment managers, investment performance of the Schemes as a whole and the success of overall investment
strategy through achievement of defined investment objectives; and
4. The Trustees fulfil the requirements of the Occupational Pension Schemes (Investment) Regulations 2008, which
stipulate that such a Statement is put in place.
It is intended that this Statement be sufficiently specific to be meaningful but adequately flexible as to be practical.
The intention is not to outline detailed guidelines for the Schemes’ investment managers – this is done within the
specific legal agreements with those parties – but rather to state the general philosophy, risk appetite and policies of
the trustees that will shape the governance of the Schemes as a whole.
This Statement will be reviewed at least every three years, and also following any change in investment policy which
impacts on the content of the Statement.
Identification of Investment Responsibilities
Because of the number of parties involved in the management of the Schemes, it is appropriate to clearly identify
each entity’s role with regard to investment in order to ensure operational efficiency, accountability and clear lines of
communication.
Company
The Company is the Schemes’ sponsor and contributes substantially to the Schemes, but is generally not responsible
for Schemes’ investments. However, the Trustees recognise that the Company’s continued financial support for the
Schemes is of utmost importance in serving the best interests of members; therefore the principles outlined in this
Statement are not shaped by the objectives of the trustees in isolation.
Trustees
The Trustees have fiduciary responsibility for selecting and monitoring the Schemes’ investments. Their specific
responsibilities include:
1. Identifying the Schemes’ risk tolerance level and formulating an appropriate and efficient investment policy which
best serves the interests of the members;
2. Delegating the management of Schemes’ investments to investment managers. The Trustees recognize that their
role is supervisory – not investment advisory;
3. Monitoring and evaluating performance results to ensure that all guidelines are being adhered to in line with
objectives;
4. Making any necessary changes in the investment strategy and structure and the investment managers,
custodians, consultants and others that provide services to the Schemes relating to the investment of assets; and
5. Regularly reviewing this Statement, which they may amend or restate at any time at their sole discretion.
38
An Post Superannuation Schemes 2014
Investment Managers
A number of investment managers have been appointed to act on behalf of the Trustees. The investment
managers must observe the specific guidelines, restrictions and philosophies within this Statement and
as expressed in any written agreement with the Trustees. Subject to such guidelines and restrictions, the
investment managers will be responsible for making all investment decisions on a discretionary basis and will be
evaluated on their ability to achieve the performance objectives set for them by the trustees.
Other parties with specific duties with regard to investment include the Schemes’ custodian, commission
recapture agent, consultants and Schemes’ administrator. These duties are separately documented within
contractual agreements with those parties, where appropriate.
Investment Objectives
The overall investment objective of the Trustees is to maximise the level of investment return at an acceptable
level of risk, through adopting a prudent, carefully planned and well‑executed investment policy. This will in turn
assist in the Trustees’ ultimate objective of maximising the security of benefits provided to members.
Risk Measurement Methods
In determining the level of risk appropriate to the Schemes at any point in time, the Trustees recognise the
importance of the nature and duration of the liabilities, and measure the risk of the chosen investment policy by
reference to these liabilities. In particular, the Trustees consider the following risks:
• The risk of achieving an insufficient level of investment return relative to the rate required to match the
growth in liabilities over time.
–– The required rate will depend on the funding policy adopted for the Schemes. Therefore, the Trustees
acknowledge the critical need for interaction and co‑operation between the trustees and the Company
when formulating investment policy.
• The risk of excessive volatility in the investment returns of the Schemes relative to the movement in liabilities
over shorter‑term periods (e.g. one year).
–– The Trustees will consider this volatility in relation to the liabilities measured under the Schemes’
Actuary’s ongoing basis and any other relevant measures. The Trustees recognise that the pattern and
volatility of the Schemes’ investment returns can impact directly on the volatility of the contribution rates
to the Schemes. Therefore, risk will also be considered in these terms where appropriate.
Managing the two risks above in isolation may lead to conflicting investment policies. Therefore, in formulating
an appropriate investment policy, the Trustees seek to arrive at an acceptable balance between these risks
in order to best meet their investment objectives. Furthermore, the Trustees will manage a range of other
investment risks using the risk management processes outlined in the next section in order to create a prudent,
diversified and efficient portfolio.
An Post Superannuation Schemes 2014
39
Appendix 1
Statement of Investment
Policy Principles continued
Risk Management Processes
The Trustees will ensure, either through direct guidance or through ascertaining the suitability of any
commingled (unitised) vehicles that are used, that policies and guidelines are in place for the appointed
investment manager and other providers such that:
• investments are, for the most part, limited to marketable securities traded on recognised/regulated markets;
• investment in derivative instruments may be made only in so far as they either contribute to a reduction of
investment risks or facilitate efficient portfolio management. Any such derivative investment must avoid
excessive risk exposure to a single counterparty and to other derivative operations;
• the portfolio is properly diversified in such a way as to avoid excessive reliance on any particular asset, issuer
or group of undertakings and so as to avoid accumulations of risk in the portfolio as a whole. Investments in
assets issued by the same issuer or by issuers belonging to the same group must not expose the Schemes to
excessive risk concentration; and
• the security, quality and liquidity of the portfolio as a whole is ensured, with due regard paid to the level of
non‑Euro currency exposure.
All investment managers are employed by the Trustees and subject to termination at any time.
Current Investment Policy
The current investment strategy of the Trustees is set out on the following pages along with a description of the
investment manager arrangements adopted.
Strategic Asset Allocation
Having had regard to the nature and duration of the expected future retirement benefits, the Trustees have
established their strategic asset allocation mix as set out in the table below and believe it prudently positions the
portfolio so as to achieve the Trustees’ objectives at the current time.
Sector
Central Weighting
Benchmark Index
Global Developed World Equities
Emerging Markets Equities
Global Small Cap Equities
35.0%
5.0%
5.0%
MSCI World index
MSCI Emerging Markets Index
S&P SmallCap Index Global
Total Equity
45.0%
–
Eurozone Bonds
European Property
Alternative Assets
Cash
35.0%
5.0%
10.0%
5.0%
BofA Merrill Lynch EMU Government 10+ Year index
Various
Various
Bank rates
100.0%
Composite
Total
The currency of the Schemes, and that of the benchmark, is the euro.
The Trustees recognise that even though the Schemes’ investments are subject to short‑term volatility, it is
critical that a long‑term investment focus be maintained. The Trustees intend to avoid ad‑hoc revisions to their
philosophy and policies in reaction to either speculation or short‑term market fluctuations.
40
An Post Superannuation Schemes 2014
Rebalancing
Market movements will result in a portfolio that differs from the strategic mix outlined in the table above. The desire to
maintain this constant strategic mix must be balanced with the cost of portfolio rebalancing. As a specialist manager structure
is in place, no single manager has control over this overall asset allocation and the Trustees shall instead formally review the
portfolio investment strategy and allocations on a quarterly basis, rebalancing to targeted central weightings where the mix
has gone outside defined ranges (outlined below) and where viewed appropriate. Cash‑flow shall be used to aid rebalancing
where the opportunity arises.
Sector
Central Weighting
Range
Global Developed World Equities
Emerging Markets Equities
Global Small Cap Equities
35.0%
5.0%
5.0%
30.0%–40.0%
4.0%–8.0%
4.0%–8.0%
Total Equity
45.0%
40.0%–50.0%
Eurozone Bonds
European Property
Alternative Assets
Cash
35.0%
5.0%
10.0%
5.0%
33.0%–40.0%
4.0%–8.0%
7.0%–12.0%
0.0%–10.0%
Total
100.0%
Manager Structure
The Trustees have appointed a number of equity and bond managers – both active and passive. State Street Global Advisors
(SSgA) manages passive equities and bonds. PIMCO manages active bonds. JP Morgan, Heptagon and Axa Rosenberg manage
active equity mandates. Together these managers manage c. 80.0% of the Scheme’s total assets. There are four property
managers – SSgA, IPUT, Fidelity and Rockspring. In addition, there are several alternative asset managers who together manage
less than 6.0% of the Scheme’s assets. A small proportion of the Scheme’s assets (approximately 2.0%) are managed directly by
the Trustees.
Performance Objectives
The performance objectives of the main appointed managers are as follows:
Investment Manager
Benchmark
Performance Objective
Composite of MSCI World index and
Citigroup EGBI 10+ Years index
Tracking error <0.3%
BofA Merrill Lynch EMU Government 10+ Year index
Benchmark +1.0% p.a. net of fees
S&P SmallCap Index Global
Benchmark +2.0% p.a. net of fees
MSCI Emerging Markets Index
Benchmark +2.0% p.a. net of fees
Various
Individual Benchmarks
SSgA Passive
PIMCO
Axa Rosenberg
JP Morgan and Heptagon
Alternative Managers
Performance is evaluated against these objectives on at least an annual basis, with a critical review every three years.
An Post Superannuation Schemes 2014
41
Appendix 2
Statement of Risks
The Trustees’ primary responsibility is to ensure that members receive the benefits to which they are entitled under the
rules of the Schemes. In order to provide for these future benefit payments, the Trustees invest the assets of the Schemes
in a range of investments and agree with the employer, on the advice of the Actuary, the rate of contribution to be made
to the Schemes to meet the balance of the cost of benefits. Under the Occupational Pension Schemes (Disclosure of
Information) Regulations, 2006‑2013, the Trustees are required to provide a statement of the risks associated with the
Schemes to members.
In a defined benefit scheme the main risk is that there will be a shortfall in the assets (for whatever reason) and the
employer is unwilling or unable to pay the necessary contributions to make up the shortfall. In this event there may be
insufficient assets available to discharge members’ expectation of benefits.
The main types of risks which may lead to a shortfall and the steps being taken by the Trustees to minimise these risks
are set out on the following pages.
Risks
Steps being taken to minimise risks
The assets may not achieve the expected return.
A Statement of Investment Policy Principles has been
put in place. The Trustees monitor the performance of
the investment managers on a regular basis and meet
with their respective representatives, as required.
Some of the assets may be misappropriated.
The Trustees have put in place a global custodial agreement
with the Bank of New York Mellon Asset Servicing BV.
The value placed on the future liabilities
may prove to be an underestimate.
The Trustees have appointed an independent professionally
qualified Actuary and discuss with the Actuary the
assumptions used for triennial valuations.
The employer may not pay contributions as they fall due.
The Trustees monitor the receipt of
contributions and pursue any shortfall.
The employer may decide to terminate its liability
to contribute to the Schemes, having given the
written notice required by the Trust Deed.
In that event, the Trustees would consider all of the
options available to them under the terms of the
Trust Deed and relevant legislation, which could
include an orderly wind up of the Schemes.
In addition to the shortfall risks previously outlined, there is also the risk that the records
relating to the Schemes’ members may not be correct.
Risks
Steps being taken to minimise risks
The Schemes’ administration records may not be correct
and may fail to comply with the Pensions Act.
The Schemes’ Secretary receives ongoing training
on all matters relating to pensions legislation.
The Trustees receive regular administration reports
from the Pension Administration Section of An Post.
The Pensions Authority has powers to pursue breaches of
the Act and the Pensions Ombudsman may investigate any
complaints of financial loss caused by maladministration.
42
An Post Superannuation Schemes 2014
Appendix 3
Internal Disputes
Resolution (IDR)
Introduction
The Pensions Act, 1990 as amended provides for the
establishment of the Pensions Ombudsman’s Office.
The Act further provides for the provision of regulations
requiring pension scheme Trustees to put in place
procedures for dealing with complaints and disputes that
come under the jurisdiction of the Pensions Ombudsman.
The regulations entitled Pensions Ombudsman
Regulations, 2003 (S.I. No. 397 of 2003) took effect in
September 2003.
An individual can make a complaint to the Pensions
Ombudsman if he/she believes, that he/she has suffered
financial loss because of poor administration of a pension
scheme (or PRSA) and they are an actual or potential
beneficiary of an occupational pension scheme (or a
PRSA). The Complainant may be any of the following:
• A member or a former member of a pension scheme.
• A surviving dependant of a member who has died.
• A person claiming to be a member or a surviving
dependant of a member who has died.
• A contributor to a PRSA.
• A personal representative of a member or contributor
who has died.
• A widow or widower of a member or contributor who
has died.
If an individual eligible to complain dies, or is under
eighteen years of age, or unable to act for themselves,
then the complaint may be made by that individual’s
personal representative.
Without claiming to be at a financial loss, anyone eligible
to complain can refer a dispute of fact or law to the
Pensions Ombudsman.
The Pensions Ombudsman cannot investigate:
• A complaint or dispute already subject to Court
proceedings – unless those proceedings are “stayed”
(i.e. suspended) by the Court.
• A complaint or dispute about a State social security
benefit (for example, Social Welfare Retirement or Old
Age Pensions).
• A complaint that Trustees are not complying with the
Pensions Act.
Where the superannuation scheme has an Internal
Disputes Resolution (IDR) Procedure, the Pensions
Ombudsman cannot as a rule investigate the complaint or
dispute unless and until the matter has gone through that
procedure and the Trustees/Company or managers have
issued their notice of decision.
Under the Pensions Act, all pension schemes must
operate an IDR procedure. Parties are not bound by the
recommendations arising out of an IDR procedure, unless
both parties agree in writing to be bound by it, in which case
the Pensions Ombudsman no longer has any jurisdiction.
Any ruling made by the Pensions Ombudsman in relation to a
complaint or dispute will be notified in writing to all parties.
The Pensions Ombudsman also has power to publish a report
on any investigation. The ruling of the Pensions Ombudsman
is binding on all parties subject to the right of appeal.
If a party to a complaint or dispute fails or refuses to comply
with the ruling of the Pensions Ombudsman, the Circuit
Court may make an order to that party to carry out the
ruling. Such an order may be applied for by the other party
to the complaint or dispute, or by the Minister for Social
Protection, if the Minister considers it proper to do so.
A party to an investigation may appeal to the High Court
from a ruling of the Pensions Ombudsman within twenty
one days of the date of that ruling. The High Court may
cancel the ruling, or confirm it or change it. Some IDR
procedures may be expensive. The legislation does not deal
with who should pay these costs.
Internal Disputes Resolution Procedure –
The An Post Main Superannuation Scheme,
1990 as amended and the An Post Spouses’
and Children’s Contributory Pension Scheme
The actual or potential beneficiary must apply to the
Trustees of the Scheme(s) in writing to make a decision
in relation to their complaint or dispute, (although a
complaint regarding a pension could be a matter for the
Company rather than the Trustees) setting out details of
that complaint or dispute. Another person can make an
application on behalf of an actual or potential beneficiary.
In all cases the application must include:
• Full name
• Address
• A complaint that pre‑dates 13 April 1996.
• Date of birth
If an individual has a complaint or dispute, they should
first pursue it with those responsible for the management
of the Schemes.
• A statement covering the nature of the complaint
or dispute with sufficient details to show why the
complainant is aggrieved.
• Address to be used for the service of documents.
• Such other information as the Trustees may reasonably
require.
An Post Superannuation Schemes 2014
43
Appendix 3
Internal Disputes
Resolution (IDR) Continued
The Trustees/Company may then respond to the claimant
either accepting or rejecting his/her case. If the case
is rejected, then the communication should include a
statement that “under Section 20 of the An Post Main
Superannuation Scheme, 1990 as amended (or Section 22
of the An Post Spouses’ and Children’s Contributory Pension
Scheme) if a member or former member is aggrieved by the
failure or refusal of the Trustees/Company to make an award
under the Scheme or by the amount of any award made, he
may appeal to the Minister for Communications, Energy and
Natural Resources who shall refer the dispute to the Minister
for Public Expenditure and Reform.
If a complaint or dispute does qualify for IDR it is forwarded
to the Company (Human Resources Manager) or the Trustees
of the Superannuation Schemes (Scheme Secretary) for
decision, whichever is appropriate. To help with the decision
making process the Trustees/Company may consult with:
On appeal to the Minister for Communications, Energy
and Natural Resources and the Minister of Finance, the
recommendation should be given in writing in a formal
Notice of Determination to the complainant.
• The complainant (oral hearing) if this would add clarity
This process should be completed within three months of
receipt of the initial claim.
• Employer representatives
• Scheme administrators
• Any other parties involved in the dispute
• Expert advisors (in house legal team etc.)
If an individual is not satisfied with the outcome of the IDR
procedure, he / she may then refer the complaint to the
Pensions Ombudsman for his consideration.
The response referred to as a Notice of Determination must
include:
• A statement of what has been decided (e.g. make a
compensating payment, reject the claim etc.).
• A reference to any legislation, legal precedent, ruling of
the Pensions Authority, ruling or practice of the Revenue
Commissioners or other material relied upon.
• A reference to any parts of the rules of the Schemes
relied upon.
• Where discretion has been exercised, a reference to
the parts of the rules of the Schemes that confer this
discretion.
• A statement that the determination is not binding unless
the person assents in writing to be bound by it.
• A statement that the Pensions Ombudsman may
have jurisdiction to investigate the matter and that
further information can be obtained from the Pensions
Ombudsman, giving his address.
How will a Complaint be dealt with by the
Trustees/Company under IDR
An individual within the Pensions Administration
Section (The Pensions Administration Manager) will be
appointed to carry out the initial screening process. This
individual will be the initial contact for complaints and
will determine the nature of the complaint i.e. whether
it may be resolved without IDR and if it qualifies for
IDR. Once a decision has been made that a complaint or
dispute qualifies for IDR, a further decision must then be
made in relation to whether the complaint or dispute is a
matter for the Company or the Trustees of the Schemes.
44
An Post Superannuation Schemes 2014
IDR Process
The following chart summarises the IDR process:
1. The complainant discusses his/her potential complaint with his/her usual contact, the Pensions Administration Manager,
Block 2B, General Post Office, O’Connell Street, Dublin 1. The Pensions Administration Manager helps the complainant to
understand whether the complaint qualifies for IDR i.e. is there a financial loss caused by maladministration or a dispute
of fact or law in relation to an action that occurred? The Pensions Administration Manager may be able to resolve the issue
to the satisfaction of the complainant. Such resolution is preferable as it avoids the expense of formal IDR procedures.
2. If the complaint qualifies for IDR (or if it does not
qualify for IDR but the Pensions Administration
Manager recommends IDR be used to resolve the
complaint), the Pensions Administration Manager
should assist the complainant with gathering
supporting evidence and putting their case to the
Trustees.
OR
If it does not qualify for IDR and IDR is not recommended
as an appropriate means of resolving the complaint, the
Scheme Secretary should report the complaint and details
of any resolution that was reached, at the next trustee
meeting.
3. The Trustees consider the complaint. They consult with an employer representative, expert advisors if appropriate and any
other relevant parties and consider the recommendation of these parties before making a decision. Trustee boards may
nominate a representative rather than all Trustees attending all proceedings.
4. If the case is reasonably clear, whether for or
against the complainant, the Trustees/Company
issue their decisions to the complainant. The
complainant either accepts the finding or
reverts to the Appeal Procedure to the Minister
for Communications, Energy and Natural
Resources for referral to the Minister for Public
Expenditure and Reform under Section 20 of
the Main Scheme or Section 22 of the Spouses’
and Children’s Contributory Pension Scheme.
5. If the Trustees decide that reference to an
independent person is likely to be useful, the Trustees
consider who an appropriate independent person
might be (e.g. a pensions lawyer employed by a law
firm that does not have any conflict of interest with
the case). The case is referred to the independent
person with supporting documents.
OR
OR
If the facts of the case are unusually complex, the case
can be put to an independent person. The Trustees
consider whether using an independent person is
appropriate or will bring additional value to the
process. For example, there may be evidence that the
complainant will not find the independent person
acceptable, or the Trustees may be satisfied that they
have already received expert and independent advice.
If the Trustees decide that reference to an
independent person is unlikely to be useful,
the Trustees must issue their decisions to the
complainant. The complainant either accepts the
finding or reverts to the Appeal procedure.
6. Under the Appeal procedure the relevant person (the Minister for Communications, Energy and Natural Resources in
conjunction with the Minister for Public Expenditure and Reform) makes known his decision to the Trustees, by way of
a copy of the Notice of Determination to the complainant with a statement that the Pensions Ombudsman may have
jurisdiction to investigate the matter and that further information can be obtained from the Pensions Ombudsman,
giving his/her address.
An Post Superannuation Schemes 2014
45
Appendix 4
Schedule BD – Actuarial
Funding Certificate
Article 4
This certificate has been prepared under the provisions of Section 42(1) of the pensions act 1990 (the act) for submission
to the pensions board by the trustees of the scheme.
SCHEME NAME:
An Post Superannuation Schemes
SCHEME COMMENCEMENT DATE:
1 January 1984
PENSIONS BOARD REFERENCE NO.
PB 43750
EFFECTIVE DATE OF THIS CERTIFICATE:
2 January 2013
EFFECTIVE DATE OF PREVIOUS CERTIFICATE (IF ANY):
31 December 2011
On the basis of information supplied to me, having complied with any guidance prescribed under section 42(4)(b) of the
Act and, subject thereto, having regard to such financial and other assumptions as I consider to be appropriate, I am of
the opinion that at the effective date of this certificate:
i. the resources of the scheme, which are calculated for the purposes of section 44(1) of the Act to be €2,017 million,
would not have been sufficient if the scheme had been wound up at that date to provide for the liabilities of
the scheme determined in accordance with section 44(1) of the Act which, including the estimated expenses of
administering the winding up of the scheme, amount to €2,328 million, and
ii. None of the resources of the scheme referred to in paragraph (1) comprise contingent assets, in accordance with and
within the meaning of the guidance issued by the Board and prescribed under section 47 of the Act.
I, therefore, certify that as at the effective date of this certificate the scheme does not satisfy the funding standard
provided for in section 44(1) of the Act.
I further certify that I am qualified for appointment as actuary to the scheme for the purposes of section 51 of the Act.
Signature:
Date: 1 October 2013
Name: Michael Madden
Qualification: F.S.A.I.
Name of Actuary’s Employer/Firm: Mercer (Ireland) Limited
Actuary Certificate No. P023
46
An Post Superannuation Schemes 2014
Appendix 5
Schedule BE – Funding
Standard Reserve Certificate
Article 4
This certificate has been prepared pursuant to Section 42(1a) of the Pensions Act, 1990 (the act) for submission to the
pensions board by the trustees of the scheme
sCHEME NAME:
An Post Superannuation Schemes
SCHEME COMMENCEMENT DATE:
1 January 1984
PENSIONS BOARD REFERENCE NO.
PB 43750
EFFECTIVE DATE OF THIS CERTIFICATE:
2 January 2013
EFFECTIVE DATE OF PREVIOUS CERTIFICATE (IF ANY)
N/A
On the basis of information supplied to me, having complied with any guidance prescribed under section 42(4)(b) of
the Act and, subject thereto, having regard to such financial and other assumptions as I consider to be appropriate, I
am of the opinion that at the effective date of this certificate:
(1) the funding standard liabilities (as defined in the Act) of the scheme amount to €2,328 million,
(2) the resources of the scheme (other than resources which relate to contributions or a transfer of rights to the
extent that the benefits provided are directly related to the value of those contributions or amount transferred
(DC resources)), calculated for the purposes of section 44(1) of the Act amount to €2,017 million,
(3) €795 million of the amount referred to in paragraph (2) (subject to a maximum of an amount equal to the
funding standard liabilities) is invested in securities issued under section 54(1) of the Finance Act 1970 (and known
as bonds), securities issued under the laws of a Member State (other than the State) that correspond to securities
issued under section 54(1) of the Finance Act 1970, cash deposits with one or more credit institutions and such
other assets (if any) as are prescribed under section 44(2)(a)(iv) of the Act,
(4) the amount provided for in section 44(2)(a) of the Act (15.0% x ((1) minus (3)) is €230 million,
(5) the amount provided for in section 44(2)(b) of the Act, being the amount by which the funding standard liabilities
of the scheme would increase if the interest rate or interest rates assumed for the purposes of determining
the funding standard liabilities were one half of one per cent less than the interest rate or interest rates (as
appropriate) assumed for the purposes of determining the funding standard liabilities less the amount by which
the resources of the scheme (other than DC resources) would increase as a result of the same change in interest
rate or interest rates is €54 million,
(6) the aggregate of (4) and (5) above amounts to €284 million, and
(7) the additional resources (as defined in the Act) of the scheme amount to €0 of which, in accordance with and
within the meaning of the guidance issued by the Board and prescribed under section 47 of the Act, €0 comprises
contingent assets and none of such contingent assets comprise an unsecured undertaking.
I therefore certify that as at the effective date of the funding standard reserve certificate the scheme does not hold
sufficient additional resources to satisfy the funding standard reserve as provided in section 44(2) of the Act.
I further certify that I am qualified for appointment as actuary to the scheme for the purposes of section 51 of the Act.
Signature:
Date: 1 October 2013
Name: Michael Madden
Qualification: F.S.A.I.
Name of Actuary’s Employer/Firm: Mercer (Ireland) Limited
Actuary Certificate No. P023
An Post Superannuation Schemes 2014
47
Notes
48
An Post Superannuation Schemes 2014
gpo
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